When people in California decide to divorce, they may be particularly concerned about the long-term financial effects of ending their marriages. Even after the emotional and practical issues have been sorted out successfully, the financial aftereffects of divorce can linger for years later. By keeping some tips and strategies in mind, people can help to minimize the associated risk and keep their financial goals in place.
For many, the immediate period after a divorce can be a tempting time to spend. People can look to make themselves feel better or redefine their single identities with a new car, vacations or even new purses, clothes or technology. However, when people are adjusting to life as a single-income household, it can be an important time to be frugal. Small luxuries are likely fine if people can afford them, but this is likely not the best time to invest in a new car or home purchase.
On the other hand, some people may struggle to pay the bills at all, especially if they're paying a mortgage that was once covered jointly. They may be tempted to liquidate some of their investment accounts in order to make ends meet. However, cashing out investment accounts can have negative tax consequences and can be a significant setback for a person's financial goals. In general, it's better to look for other ways to save and opt for a more frugal lifestyle while keeping investments intact. The same is true for 401(k) funds; even a cash distribution for which penalties are waived can change a person's tax bracket.
People who decide to divorce can emerge successfully from their marriage with their financial integrity intact. A family law attorney might be able to work with a divorcing spouse to achieve a fair settlement on a number of issues, including spousal support and property division.