Wednesday, January 19, 2022

Suddenly Single



Ask The CFP® Practitioner
Darcie Guerin

“Rock bottom became a solid foundation on which I rebuilt my life.” J.K. Rowling, British Novelist, author of The Harry Potter series.


Question: My divorce is final, and I need to focus on my financial situation. Where do I start?

Answer: Going through a divorce can be an emotionally trying time, but it is also an opportunity to start fresh. This is the time to make sure your finances are on the right track. Doing so will help you put the past behind you and assist you in assembling the foundation for your new financial future.

You’ve made it through the divorce process, and now it’s time to design your life as a single person.


Assess your current financial situation

Start by evaluating income sources and identifying expenses. If you’re working, include salary, wages and bonuses. Also add any alimony and/or child support as well as investment income from dividends and interest.

Next, classify expenses, distinguishing wants versus needs. Needs are fixed expenses, such as housing, food and transportation. In contrast, wants are discretionary items like entertainment, travel and other non-essential expenses. Initially, you may need to reduce some of your discretionary expenses until you have a well-defined routine and grasp of cash flow. It’s important to socialize with friends and treat yourself to an occasional reward, but stick to a budget, understanding that you may not be able to maintain the lifestyle you were accustomed to before your divorce.

Identify your financial goals

Ask yourself what is important to you. Begin by making a list of what you’d like to achieve. For instance, do you need to put more money towards retirement? Are you interested in going back to school? Would you like to save for a new home? Most importantly, is your cash reserve properly funded to provide for emergencies and/or opportunities?

Debt and Credit

If you have debt, plan to pay off high-interest accounts first; always pay on time to avoid unnecessary, annoying and costly late fees. Monitor balances, and be aware of how much interest you’re paying. Review your credit report and check it for any inaccuracies. Are there joint accounts that have been closed or refinanced? Are there any names on the report that need to be changed? You’re entitled to a free copy of your credit report once a year from each of the three major credit-reporting agencies. You can go to for more information.

If you need credit in the future, a positive credit history is important, allowing you to obtain credit when you need it and typically at lower interest rates. Some employers even require good credit as a prerequisite for employment.

Insurance needs

Make sure policies match your current needs for property, life and disability. This is especially true if you are reentering the workforce or if you’re the custodial parent of your children.

Tax implications

Tax filing status is determined on the last day of the tax year (Dec. 31). For tax purposes, if you were divorced on Dec. 31, you would be considered divorced for the entire year.

Sources of income and your filing status may change. There may be new sources of income, such as alimony and/or child support. Alimony is taxable income while child support is not. Finally, if you have children, and depending on whether you are the custodial parent, you may be eligible to claim certain credits and deductions. These could include dependency exemptions, the child tax credit, and the credit for child and dependent care expenses, along with student loan interest and tuition deductions.

Change your beneficiary designations

After a divorce, you’ll likely want to change the beneficiary designations on any life insurance policies, retirement accounts and bank or credit union accounts. Keep in mind that a divorce settlement may require you to keep a former spouse as a beneficiary on a policy, in which case you cannot change the beneficiary designation.

This is also a good time to make a will or update your existing one to reflect your new status. Make sure that your former spouse isn’t still named as a personal representative, successor trustee, beneficiary or holder of a power of attorney in any of your estate planning documents.

Onward and upward

No one gets married thinking that they’ll divorce. Although it can certainly be done on your own, you may want to consider consulting a CERTIFIED FINANCIAL PROFESSIONAL™ to help you transition into your new financial life. In addition to helping you assess your needs, a CFP® can work with you to develop a plan designed to help you address your new financial goals. Stay focused and invest accordingly.

You should discuss tax and legal matters with the appropriate professional. This information is general in nature, it is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or solicitation to buy or sell any particular investment. There is no guarantee any particular investment strategy will be successful. Opinions expressed herein are those of the author and subject to change at any time.


This article provided by Darcie Guerin, CFP®, Associate Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, or Please contact Darcie with any questions you would like to have answered in this column.


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