With a quarter of Americans without retirement savings, it’s important for people to save money after a life-changing event like a divorce, according to one expert.
“Reduce your expenses, and don’t try to keep up the lifestyle you had before,” Linda Farinola, founder of PFG-Financial Planning and Management, recently told Yahoo Finance Live (video above). “You’re going through a divorce. Nobody gets everything they want or need, so you have to accept that.”
According to Farinola, divorced people need to ask themselves two crucial questions after a split: “Where are you now and where do you want to go?” She advised them to examine their financial current assets and liabilities and take stock of their resources, expenses, and needs.
One big action women can take after their divorce is to sell the big family house they shared with their spouse to save money for retirement. Even if a woman feels emotionally attached to the house she lived in when married, she should move out to reduce expenses, Farinola said.
“I can tell you, I did it,” Farinola said. “It was the best thing I ever did, was to lose the big elephant in the room.”
While it’s important to lean on family and friends after an emotional event like a divorce, those going through a divorce should seek out impartial financial guidance.
“Friends and family are great for emotional support," Farinola said, "but look for some objective advice also."
Farinola also advised parents to tell their kids the truth about money after a divorce because they’re already so perceptive about changes in the family. Also, avoid the temptation to overspend to please your children.
"Don’t promise them or give them things that are going to put yourself in a worse position. They will understand,” Farinola said. “Set boundaries for yourself. Set boundaries for them … You have to look out for your future.”
Ella is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.
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