Valentine’s Day is a day devoted to romantic love and oftentimes full of expectations. In cases where expectations are not met, it can be the last straw for someone clinging to hope to save a marriage. There are no greeting cards with this message: It’s complicated.
Most people contemplate divorce for six months to a year before taking any action; some take even longer. You may limp through the holiday season, filled with family events and traditions, trying to keep the peace in front of relatives and friends. You may still be unwilling to confront the difficult issues. But when the holiday bills arrive with the financial pressure they can bring, and one more Valentine’s Day is a disappointment, February 15 can be the day to take action. It can be your way to protect your romantic heart’s future. It can be one New Year’s resolution that you keep.
But who is going to protect your finances during this difficult transition?
Regardless of when someone decides to end their marriage, I advise them not to try to go through the process without a Certified Divorce Financial Analyst (CDFA®) to protect their financial interests as a part of the divorce team. Yes, I said team. You don’t have to go through this alone.
Marriage is about love; divorce is about money. If you were not the financial manager of your marriage, you may not have all the information you need at your fingertips. What will you need to know? Everything! What you own, what you owe, what you both earn, and what you both spend.
You go to a divorce lawyer for legal advice and strategy; your CDFA professional is the instrument to clarify the financial aspects of the strategy. Your CDFA gets and analyzes the numbers of your life, and helps you quantify your goals. This makes it easier for your attorney to move forward with the legal process, and can help to speed a successful outcome.
Working with clients and their lawyers, a CDFA forecasts both the short- and long-term effects of the proposed settlement, letting you know what the financial future may bring with Settlement A vs. Settlement B. She can give your attorney the reports and tools he may need to help settle your case. Your team will forecast your future needs, as well as answering the basic question: Will I Be OK? And the other questions, as well: Can I keep the house, or do we need to sell it and move? How will we get the kids through college? How can I pay for courses to prepare for a new job or career? How will I just pay the bills? All these require a mix of short-term and long-term planning that your CDFA can do.
So if your Valentine's Day is the final disappointment, take heart. A new start can lie ahead with all of your interests protected. So start out on the right foot – financially.
Organize and value your assets. Prepare a Statement of Net Worth and prioritize your goals.
Estimate your immediate needs. Develop a budget for current expenses and project a budget for future needs. This is the stage when you will start to build your picture of tomorrow.
Understand and analyze your liabilities, while also gauging your future earning potential. Create “compare and contrast” scenarios to understand how one change could affect other things.
Now it’s time to exercise your new-found control over your financial future. It’s all about overseeing asset transfers, setting up budgeting and money management systems. It’s time to review your risk profile and reallocate investments to meet your current needs, and keep you on track with your goals.
So on February 15, you can take the first steps. With the right guidance, and the right members of your team, you can take the financial pitfalls out of this emotional and challenging time and take control of your finances – and your fresh start.