Six Common Financial Mistakes People Make After Divorce

When your divorce is over, you may think that it is finally done, and you can move on. However, this is a crucial time to reset your finances and avoid some of the common financial mistakes post-divorce that can have long-term repercussions.

We frequently work with Certified Divorce Financial Analysts (CDFAs) who have shared their insights regarding the most common financial mistakes people make after divorce. As we explore these mistakes, we also share strategies for avoiding them so you can ensure a smoother financial transition post-divorce.

    One of the most common mistakes is mismanaging any lump sum of liquid assets received in the divorce settlement. The sudden influx of money may lead to a false sense of financial security, tempting some to overspend. It is crucial that those who are newly divorced resist this urge and adhere to a meticulously crafted budget that takes into consideration their long-term financial goals and expenses.

    Common mistakes after divorce

    Creating a budget is only the first step; sticking to it is the hard part. The first year after the divorce is a critical time when you will need to adjust to the new financial landscape. You should track spending diligently and make necessary adjustments to ensure financial stability.

    Post-divorce is an important time to revisit and reassess your financial plan to align it with your new circumstances. Whether it’s adjusting investment strategies, revising retirement goals, or recalculating expenses, staying proactive is key to financial success.

    Trusting that the financial assets you receive in the divorce will grow without a solid investment strategy can be detrimental to your long-term financial stability. Collaborating with a trusted financial advisor can help develop a tailored investment plan aligned with your risk tolerance and long-term objectives.

    Life after divorce involves constant change and evolution, and financial plans should evolve accordingly. Changes such as returning to the workforce, downsizing homes, or incurring unexpected expenses require continual reassessment of financial strategies to adapt effectively.

    It is natural to seek comfort in retail therapy or impulsive spending during emotionally taxing times. However, decisions driven by emotions rather than financial prudence can derail long-term financial stability. Seeking guidance from a knowledgeable advisor can provide the necessary objectivity and help you avoid emotional spending traps.

    As a final tip, we want to emphasize the importance of working with a financial advisor with a track record of creating a supportive and enduring relationship with their clients by offering both empathy and tough love when needed. With the right strategies and support system in place, you can confidently enter this new chapter of your life equipped with the tools you need to achieve financial empowerment and peace of mind.

    At Vacca Family Law Group, we understand the unique challenges of divorce and the importance of working with divorce financial professionals. Our Collaborative Divorce attorneys and Mediators can offer tailored advice to help you make informed decisions. Call us at (646) 798-4603 or contact us online to schedule your free introductory call.

    Vacca Family Law Group is located at One Grand Central Place, 60 E. 42nd St., Suite 764, New York, NY 10165.