Case Study on Carolyn, late 30’s, divorced with 2 children. Annual Income: $42,000 Mortgage: $170,000 Monthly Household Expenses: $4,000. Savings: None If you find yourself a divorcee with children do not be discourage, this is a common occurrence nowadays so there is a lot of help available. Your first concern should be to protect yourself and your children financially.
- Buy Health Insurance, if you are not already covered by a plan at work.
- Buy Life Insurance. Even if you have life insurance through your employer, buy some individual life insurance outside of work. Life insurance through an employer usually ends at employment.
- Build an Emergency Fund. You can build this up slowly, but start one. You should aim toward having at least one year of your annual income invested in your emergency fund.
- Start 401k contributions, if your employer offers a 401k plan. If your employer does not have a 401k plan, open an individual retirement account and contribute to that every year. If necessary, your children can get college loans but you cannot get a retirement loan. So although you may want to invest for their college instead of your retirement, resist that temptation. Your children will be okay if they have to take out loans for their college educations.
Help is available, you just need to ask for it. A financial planner or investment advisor can offer you some guidance and direction, sometimes even without an initial consultation fee.