A divorce can be one of the most challenging experiences in life. How you approach the divorce and manage the divorce both emotionally, legally and financially can have a huge impact on your ability to recover and rebuild a better life for yourself. They key is don’t try to go it alone.
Women work best in a community but when experiencing divorce you must build your community that can provide both objective advice while supporting and encouraging you to make the best decisions for your future so that you can heal and shine again.
It’s important that you formally ask for their help and to be available to you and a part of this community.
Your divorce community must incorporate one of each of the following.
- A family member who understands your situation and challenges but can also be objective with their advice and support.
- A friend who can commit to supporting you and provides sound and objective advice but who can listen and empathize when needed.
- An attorney that is recommended and that you LIKE with whom you feel will provide the best council.
- A Financial Advisor who respects women and provides not just investment advice but the education you need to understand your money and what it means to your future.
- A Life Coach who will not just be a sounding board but provide action steps to help you move forward and improve your life.
Think of a beautiful diamond ring, that diamond is held firmly in place by prongs that do not hold that diamond down but together supports that diamond so everyone can see its beauty and brilliance.
You too can become that diamond again, but it starts with building your community.
Ask any child where money comes from, and the answer you’ll probably get is “From a machine!” Even though children don’t always understand where the money comes from, they understand at a young age that they can use money to purchase things they want. Start teaching your children how to handle it wisely as soon as they show interest in it. The lessons you teach your children about money will provide a solid premise for making their own financial decisions in the future.
There are four lessons that you can teach your children about money: learning to handle an allowance, opening a bank account, setting and saving for financial goals, and becoming a smart consumer.
Lesson 1: Handling an allowance
An allowance is usually a child’s first experience with financial independence. Your child can begin developing the skills to saving and budgeting for the things they want. It’s up to you to decide how much to give your child based on your values and family budget.
*A rule used by many parents is to give a child 50 cents or 1 dollar for every year of age.*
Here are some things to keep in mind when dealing with allowances:
- Set some boundaries. Talk to your child about the types of purchases you expect, and how much of their money should go towards savings.
- Stick to a consistent schedule. Your child’s allowance should be given on the same day each week with the same amount.
- You may also consider giving an allowance “raise” to reward your child if they handle their allowance responsibly.
Lesson 2: Bank Accounts
Taking your child to open an account is an easy way to introduce the notion of saving money.
Many banks have programs that provide activities designed to help children learn financial basics. Here are some other ways you can help your child develop good savings habits:
- Help your child understand how interest compounds by showing him or her how much “free money” has been earned on deposits.
- Allow your child to take a few dollars out of the account occasionally.
- Your child may lose interest in saving if they never see money coming out of their account.
Lesson 3: Financial Goals
Children don’t always see the value of putting money away for the future. How can you get your child excited about setting and saving for financial goals? Here are a few ideas:
- Let your child set his or her own goals to give some incentive to save.
- Write down each goal, and the amount thatmust be savedon a regular basis to reach that goal.
- This will help your child learn the difference between short-term and long-term goals.
- Put a picture of the item your child wants to an item that can represent their goals like a piggy bank.
Your child will learn to make the connection between setting a goal and saving for it.
Finally, don’t expect a young child to set long-term goals. Young children may lose interest in goals that take longer than one or two weeks reach. Over time, your child will learn to become more disciplined in their savings.
Lesson 4: Becoming a Smart Consumer
Children are constantly tempted to spend money, but not wisely. Your child needs guidance from you to make smart purchasing decisions.
- Set aside one day every month to take your child shopping. This will encourage your child to save up for something he or she really wants rather than buying on impulse.
- Just say no. Teach your child to thoroughly consider purchases by explaining that you will not buy them something every time you go shopping.
- Show your child how to compare items based on price and quality. Take them grocery shopping and explain why you are purchasing a certain item over another.
- Let your child make mistakes. Eventually, your child will learn to make good choices even when you’re not there to give advice.
We all talk about winning the lottery, some just talk about it while others consistently buy tickets in hopes of winning the “Big Pay Day”. Whether it’s the lottery, a substantial inheritance ,or sudden financial windfall, how would you use that money? Without thoughtful preparation, a windfall can become your downfall. Consider the following:
- If you won the lottery tomorrow how would you spend the money?
- What would your objective be or what would you hope to accomplish with this money?
- How can I make this money last my lifetime and beyond?
- In what ways can I use this money in meaningful ways?
While estate planning is important to BOTH men and women, it often has a greater impact on women. Women (on average) live longer and tend to marry older spouses, which makes them three times more likely than men to be widowed at 65. So for women, estate planning is a crucial part of retirement planning. Since they usually survive their spouses, women more often have the last word about how much wealth goes to family, charity, and the taxman.
Wealth is defined as a measure of the value of all of the assets of worth owned by a person, community, company or country. It is the found by taking the total market value of all the physical and intangible assets of the entity and then subtracting all debts. Wealth is expressed in a variety of ways. For individuals, net worth is the most common expression of wealth, while countries measure by gross domestic product (GDP) or GDP per capita. This is just a general definition of wealth; each individual definition of wealth varies between person to person.
Estimating what your estate would be worth if something happened to you is the only way to judge whether you should be making estate plans:
To get started consider the following major elements of your estate:
- Real estate
- Personal property (cars, furniture, electronics, art)
- Value of any retirement plans (including IRA’s)
- Bank accounts
- Life Insurance policies you own
- Stocks, bonds, mutual funds and annuities
Understanding what you are worth and what you own is a crucial step in planning for your future.
With all the banks and credit unions as well as a growing number of other banking options to choose from, how do you choose which is best for you?
Type of Bank
| Commercial Bank
- Full range of services (including online)
- Many branches with ATMs
- High fees
- Less personal service
| Credit Union
- Low fees
- You have a say in setting policy
- Need to meet membership requirements
- Limited access to ATMs
| Savings and Loan
- Lower fees than commercial banks
- Personal service
- Some weekend hours
- Fewer branches than commercial banks
- Limited ATM access
| Virtual Bank
- Higher interest on deposits
- Banking at your own convenience
- No personal contact
- Mail non electronic deposits
- Fees to use ATM
| Brokerage Firm, Mutual Fund, or Insurance Company
- Low cost or free checking
- May provide loans against investment balances
- May require high minimum balances
- High fees
Most of these institutions offer the same basic services; the key things to consider when you make your choice are the costs of banking, the hours and locations most convenient for you, and customer service.
Source: Morris, A Woman’s Guide to Personal Finance
A financial plan is a written document that spells out where you are in your financial life, where you want to be, and the investment strategies you will implement to reach your goals. A substantial financial plan should include an emergency fund.
What is an emergency fund?
An emergency fund is money that is set aside to be used in the case of an emergency, such as the loss of a job, an illness, or the death of a spouse.
Why have emergency funds?
An emergency fund increases financial security by constructing a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt.
How much should I be saving?
It is suggested that you save enough money to cover 3 to 6 months of expenses in a liquid account.
Talking about money with your partner is tough. Eventually, we all have to do it. Don’t try to negotiate about money before airing your feelings; otherwise, negotiations will always break down. Here are some tips to get started with talking to your partner about money:
- Find an appropriate and stress free time when money is not a loaded issue (don’t use tax season for example).
- Articulate your concerns and fears about your partner’s money style. After you express your concerns, acknowledge what you admire about their methods.
- Talk to your partner about your goals for the future, short and long-term.
- Share your hopes and dreams.
- Contemplate making a shared budget or a spending plan together by merging your hopes and the goals.
- Set up a time to have the next talk. Aim for weekly conversations in the beginning, then monthly ones.
Source: Mellon, Men, Women, and Money
Financial independence comes from respecting and appreciating money by taking care of it. How do you take care of money? There are four rules that you should follow:
Spending less means never buying something that you can’t afford. The big secret to achieving higher earnings is to stop creating debt.
Saving more means paying yourself first. Consistently put money in your bank account until you have enough to cover emergencies and any unexpected loss of income.
Put money in assets that will grow faster than inflation and taxes can take away. The biggest risk for women is that they will outlive their money. A portion of money earned needs to grow faster than inflation.
Give Generously to Causes You Truly Believe In
Give thought about where you want to make a difference and create a plan.
The goal for you is to have choices, to have freedom to live life on your terms, and to create a fulfilling outcome from your financial decisions.
Source: Barbara Stanny, Secrets of Successful High Earners