Taming Divorce’s Paper Tiger

Taming Divorce’s Paper Tiger By Fabienne Swartz

{2:58 minutes to read}

Divorce is an emotional roller coaster.

You might wake up one morning in a good mood and confident that the worst is behind you when, all of the sudden, an email from your ex sends you reeling. And on top of that roller coaster, there is another dizzying challenge: Taming the paper tiger of financial documents.

Just as a divorce coach dissects emotional obstacles for their clients, financial advisors dissect that intimidating mound of bills and monthly statements. In New York, the first step toward that goal is gathering the required information to complete a Statement of Net Worth.

I view the Statement of Net Worth as an opportunity; once all of the pertinent information has been gathered, in almost every instance, it becomes apparent that living on one income is going to force each party to make cutbacks in their spending. That is where the idea of spending plans comes in.

Spending Plans

Many financial advisors look at spending plans like healthy eating plans: The goal is long-term and achieved slowly. While the process requires a little discipline every day, the rewards of being financially strong are worth it.

The first step in creating a spending plan is to know your current spending habits. That means collecting receipts on all your purchases – especially the cash you spend.

If it turns out that there is a surplus, attention can be focused on what to do with it. Investing it with an advisor is always a good idea, but taking courses at a community college is another type of investment. This is especially true for women reentering the workforce, many of whom wish to acquire new skills in order to be competitive in the job market.

Spending too much is more common than having a surplus. This can be for many reasons, including the fact that people who are recently divorced are tasting their freedom for the first time in years – and that may include gambling, travel or the proverbial post-divorce race car. When the time eventually comes to get serious, a spending deficit is easier to fix than many people would believe.

It helps to ask the following questions:

  • Are you buying on impulse, or do you really need the things you buy?
  • Do cheaper ways exist to get the things you need?
  • Do you spend to make yourself feel better?
  • What other things can you do instead?

After the divorce is finalized, I always encourage my clients to keep tracking their expenses – even if they simply throw their receipts into a shoe box and let someone else do the accounting.

For people who are not accustomed to it, spending plans may initially be challenging to adhere to. The good news is that it gets easier every day. There are also professionals that are available to help. Mediators, financial advisors and divorce coaches have revolutionized the divorce process with Alternative Dispute Resolution, or ADR. To find out more about the role financial advisors play in ADR, click here.

Fabienne Swartz JD (Belgium) CDFATM
Certified Divorce Financial AnalystTM
500 Mamaroneck Av.
Suite 320
Harrison, NY 10528
(914) 798-6940

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