A Woman’s Guide to Navigating Widowhood and Divorce

As women, we often bear the emotional and financial burdens of these life changes. The emotional toll can be overwhelming, and the financial implications can add another layer of stress.

You should know that you are not alone on this journey, and there are steps you can take to regain control and build a secure future.

Take a breath, then get organized.
One of the most important things anyone can do after a traumatizing event is to stop and take a breath.

It’s natural to feel the urge to make quick choices to regain a sense of stability, but most professionals advise avoiding making any significant life changes for at least a year. This allows you to process your emotions and adjust to your new reality without the added pressure of making life-altering decisions.

Whether it’s moving to a new city, buying a new home, or making substantial financial investments, giving yourself time can help you make more informed and thoughtful choices.

Now that you have taken a moment to breathe, you should organize your financial documents.

Having all your financial information in order can make a significant difference in managing your finances effectively. Gather bank statements, tax returns, insurance policies, and any other relevant paperwork. This organization will not only help you keep track of your financial situation but also ensure that you don’t miss any important deadlines or payments.

Establish a rainy-day fund

Building an emergency fund is another critical step in ensuring financial stability during this transitional period. Setting aside three to six months of living expenses can provide a financial cushion to cover unexpected costs, such as legal fees or urgent home repairs. I know, this may seem impossible but doing so will give you peace of mind knowing that you have a safety net to fall back on, then you can focus on rebuilding your life without the constant worry of financial instability. Here are three steps to help you get started:

1. Set a Savings Goal: Determine how much you need to save by calculating your monthly living expenses. Again, aim to set aside three to six months’ worth of expenses. This amount will provide a financial cushion to cover unexpected costs.
2. Create a Budget: Track your income and expenses to identify areas where you can cut back and save more. Use budgeting tools or apps to help you manage your finances effectively. Allocate a specific amount of money each month towards your emergency fund.
3. Automate Your Savings: Set up automatic transfers from your checking account to a dedicated savings account. This way, you can consistently contribute to your emergency fund without having to think about it. This will also help keep you from seeing it as spendable funds. Think of it as paying a bill to yourselfRemember… even small, regular contributions can add up over time and help you reach your savings goal. The important part is to start somewhere.

Is it a house or is it a home?

If you have a home and it will be your responsibility, take the time to assess whether it makes sense to keep, sell, or rent it out. Be sure to consider the financial implications of each, such as the maintenance costs of hanging on to the property or the potential capital gains taxes if you sell it.

You have a few considerations when looking at the house and whether it is something to hang on to or not:

Your Home: Does keeping the home provide a sense of stability and continuity? Sometimes, that can come with significant financial responsibilities. You’ll want to be prepared for the future bills, taxes, and work that it will take to keep your home.

Just a House: On the other hand, selling the house could free up money and time that can be used to invest in other areas of your life. If you want or need to find new housing, weigh the pros and cons of renting versus buying a new home. Renting may offer more flexibility and lower upfront costs, while buying could be considered a long-term investment.

Prepare for the future

Next you should consider updating your estate plan.

This step will ensure that your wishes will be fulfilled by having your will, power of attorney, and beneficiary designations reflect your new situation. If you have young children who are minors, you may want to consider appointing a guardian and setting up a trust to manage their inheritance. Updating your estate plan will provide peace of mind knowing that your loved ones will be taken care of. Here are some things to know about estate planning and why it’s important:

What to include in your Estate Plan: Your estate plan should include several key documents, such as a will, financial power of attorney, and healthcare power of attorney. These documents will ensure that your wishes are followed regarding your property, financial accounts, and healthcare decisions in case you become incapacitated or pass away.

Update Your Estate Plan Regularly: It is important to keep your estate planning documents current and accurate. Any changes or updates should be communicated to your estate planning attorney to make the appropriate updates. This will ensure that your estate plan reflects your current wishes and circumstances.

Plan for Taxes: Estate planning can help minimize taxes and ensure that your assets are distributed according to your wishes. Understanding the tax implications of your estate plan, such as potential capital gains taxes and estate taxes, is key. Consulting with a financial advisor or estate planning attorney can help you navigate these complexities.

Ask for Help

Good news is, you don’t have to do this alone. Seeking professional financial advice can be crucial during this time. Navigating the financial complexities of widowhood or divorce can be daunting, and a financial advisor can provide valuable guidance. They can help you develop a new income and expense plan, manage retirement accounts, and ensure that you are making informed decisions about your financial future. In addition, they also understand the nuance of tax implications of your new financial situation and will know how to set you up for a great future.

In addition to professional advice, it’s important to educate yourself about your financial matters. Take the time to learn about budgeting, investing, and managing debt. There are many resources available, including books, online courses, and workshops, that can help you build your financial knowledge and confidence. Empowering yourself with financial literacy will enable you to make informed decisions and take control of your financial future. A good financial advisor will also help to educate you on these items.

One last thing…

Finally, remember to prioritize your emotional and physical well-being. While widowhood or divorce can be challenging, it’s essential to focus on self-care. Surround yourself with supportive friends, family, or a therapist who can help you navigate emotional challenges. Engage in activities that bring you joy and relaxation, whether it’s exercising, pursuing a hobby, or spending quality time with loved ones. By taking care of your mental and physical health, you’ll find the strength and resilience to embrace the future with confidence and optimism.

The content provided is for educational and informational purposes only and should not be considered as a basis for making any investment or financial decisions. Strategic Financial Services provides personalized advice tailored to the specific needs of each client. This material is not intended to offer legal or tax advice; please consult with a qualified tax professional or attorney for such services.

All investments involve risk, including the possible loss of principal. Strategic Financial Services is a registered investment advisor. Registration does not imply a specific level of expertise or training.