By: Hirsch Serman, MBA, CPA
Possibly the most pressing concerns through a divorce (and many other life cycles) is our financial future. This may be particularly pressing if you were not the one managing the daily finances, working the budget, paying the bills, paying down debt etc. You may have asked yourself the question, how am going to learn all this?
There is a (not so) secret you need to know! The truth is your partner and everyone else you see “comfortably” managing their finances all had to learn it at some point – none of them were born with a calculator in one hand or knew how to balance a check book. The key is that it is never too late to learn!
Financial fear is easy to understand as most of us have wrenchingly felt it, deep inside. It may come with the feeling of helplessness, paralysis of what to do next, or confusion in moving forward. Often this is because you have not been exposed to managing your finances in a structured manner and/or may be relatively new to handling the household bills and budget (assuming there is a realistic budget that has been created and you are living to).
That is okay. In fact, it is a fantastic first step you have taken.
Financial freedom on the other hand is having good money management, low expenses, not becoming a slave to your spending habits, minimal to no debt, and learning how to happily live within your means. Wealth is not the same as financial freedom. Financial freedom helps you detach from materialism. This too has a learning curve.
Overcoming financial fear and replacing it with financial will be one of the most empowering accomplishments of your life.
Here are some of the steps I would suggest you take to create financial freedom:
- Have a plan – having a plan of action will shorten your learning curve and help you focus on what you need to accomplish. The approach we take at Lifecycle Financial is to Prioritize ~ Organize ~ Simplify.
- To ask or not to ask, that is the question – there are many questions to be asked, ask them. And there will be follow up questions arising from the first questions. Ask them too.
- Learn as much as you can – there is a tremendous amount of information out there. Knowledge is empowering and this is the time, more than any before, to be empowered.
- Professional guidance – sometimes working with someone who can get you past the “paralysis” stage or who help you ask the questions you are not even sure to ask is vitally important. Having a financial counselor can reduce your stress and minimize the hours of confusion. They can also help you create a simplified system to understand your spending habits, reduce your debt, pay your bills and maintain your high credit score.
- The early bird – the earlier in the process you can get started the better. This will help you understand what you need moving forward and will be far less costly.
- Consistency is key – having a system to manage your budget, bills, and daily finances will help with many other key aspects of financial freedom (understanding your spending habits, maintaining a good credit score, not incurring unnecessary fees and interest on late payments etc. Having a plan, learning all you can, and working with a financial counselor will help you achieve all this and more.
I cannot tell you how often I have heard someone say, I just want this to be over!! As stressful as a divorce is, it is essential to remember that a divorce is not the last chapter of this life, it is the first chapter in the rest of your life.