Following a divorce, one of the many changes that you have to make includes how you handle your finances. If both you and your spouse worked, you are no longer a dual-income household.
While you may have to adjust to a new financial situation, you can make the most of it and benefit from your separation.
Fewer financial disagreements
Financial disagreements are among the most common topics for people to fight over prior to a divorce. You and your former spouse may have had different ideas on how to spend your money. He or she may have made investments that you did not agree with or had spending habits that conflicted with your budget plan. Once you have a single-income household, you have control over your finances.
You no longer have to worry about fighting with your spouse about your financial decisions. Instead, you can invest, save or spend your money how you want to.
Retirement fund access
If you access your retirement fund too early, you may have to pay an early withdrawal fee. However, after a divorce, an agreement called the qualified domestic relations order allows you to withdraw from the account without the 10% penalty attached. While cashing out a retirement plan may feel risky, it can also give you more investment options.
For older couples, you may be able to access your spouse’s social security benefits. Spouses married longer than 10 years receive social security up to 50% of their ex’s benefits.
While many couples have a reduced income following a divorce, they also have more freedom to save and invest their money.