Tuesday, 19 March 2019
Perhaps there were years of rumblings that led to an eventual split, or maybe it happened literally overnight.
But before you knew it, you were drawing up divorce papers. No matter how your relationship ended, money matters more than it ever did before when you go from being a full nuclear family to a single parent. When you're married, your spouse generally serves as a safety net to get you through the hard times, like a lay-off or drop in business. But when you're single, your mindset—and spending habits—must make a shift.
"I would definitely encourage people to reflect on their values in terms of what's important and spend your money according to your values," says Shannon Kolakowski, PsyD, a clinical psychologist and author of books including Single, Shy, and Looking for Love and When Depression Hurts Your Relationship. "It's easy to spend money on frivolous things or overpriced items that don't have any real long-term value," she says. Instead, it's smart to give yourself time to sit down and think about short- and long-term goals for yourself and your family, and put your financial efforts towards those goals.
Even though you might be worried—or downright scared—about money now that you're on your own, be smart about understanding your financial reality and make good choices. Don't go into denial. "That will make you feel more emotionally secure than if you're just getting by and trying not to think about it because it's too overwhelming," Kolakowski says.
If things like education and travel are important to you, focus your saving and spending efforts in these areas, and have conversations with your kids about family priorities so they understand why you're making these decisions. Explain that if you eat at home instead of going to a restaurant, you could be putting $75 more into a vacation fund.
According to TurboTax, newly-divorced parents need to pay attention to certain areas of the tax code that may change along with their marital status. Ways to help your tax burden include:
Kolakowski warns that if you're having money troubles, the one thing you don't want to do is plant seeds of worry in your children's minds. For example, if you need to make a choice between paying off your credit cards and paying for college tuition, don't make it seem like you're jeopardizing the family's security. You can allude to something in a truthful, non-alarming way, such as, "I can offer a little help on your tuition, and we'll work together to find the best loans and scholarships for you."
Likewise, if you and your ex don't agree on child support, alimony, or how money should be spent, the children should not be privy to those conversations. "Especially if your financial position changes after the divorce, try to talk about money in a positive way and talk about saving in a positive way," Kolakowski says.
"There definitely is value in striking that balance and explaining some of the purchases—and the value of money."
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA Compass does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
Some tips from Kimberly Palmer, author of, "Smart Mom, Rich Mom," a how-to book for moms on building wealth for their families.
Most people avoid talking about money but sometimes that's impossible. Find out how to navigate seven common situations when money comes up.