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5 Financial Mistakes to Avoid After a Breakup

The period after a break up can be one of the most tumultuous times in your life, but it can also be extremely tumultuous for your finances. If you are going through a difficult breakup, then it is best to not make it harder by ruining your finances along with it.آ A break up isn't easy, but it can be even harder when you make the below financial mistakes. Here are five post-breakup mistakes that are commonly made and how to avoid them.

1. آ Not Investing Your Alimony

One of the largest mistakes people make after a divorce is not doing anything with their money gained from alimony, but instead simply collecting and spending it. In many cases, after a hard breakup people who were once actively managing their money let their good financial habits slide and turn into passive habits, which can cause their financial situation to plummet before too long. Instead, invest your alimony and know that paying attention to your finances must be an active, ongoing affair.

2. آ Going at Your Finances Aloneآ

Although it may hurt a little to ask for financial help, it's imperative that you fully understand your financial standing and how it has changed after a breakup. If you look for financial advice, you'll find financially sturdy individuals that can aid you in coming up with a long-term plan containing the means to save for the retirement you want and plan all of the vacations you'd like to go on, as well as see your future financial potential. If you are not used to asking for help, then you may be more comfortable asking it from a professional financial advisor instead of a family member or friend. Make sure that you ask for help from the right individual, as not everyone is suited to give you sound financial advice. Lastly, it is best to not make any major financial decisions until you have sat down with your advisor and determined what you want your new, single life to be like.

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3. آ Underestimating Your New Expenses

Even if you're given the house in a breakup, you may have to downsize your finances if you aren't able to afford your day-to-day expenses. It's recommended that you be realistic about how much money you need in your new single life. Some things to take into consideration are the amount of money you require for food, clothes, as well as discretionary items such as eating out or going to the movies every once in a while. Keep in mind that the end goal is to be able to cover your expenses without depending on your ex financially.

4. آ Spending Like Youآ Stillآ Have Two Incomes

If you had a joint income with your ex, then you likely won't be able to spend the same amount of money as you did. Rather, you need to create a budget that is based on your single income and then spend your money accordingly. In some cases, this may mean that you have to cut back on some of the lifestyle perks that you were enjoying such as dining out every other day or having an expensive gym membership.

5. آ Forgetting About the Tax Implications

In a divorce, you must keep in mind that even when both you and your ex agree on how your assets will be divided, you must be aware of the tax implications that are involved. For example, you may be happy about being handed an investment account that earns $50,000. However, you have to be mindful that that portfolio will cause you to take a substantial tax hit, which will decrease the overall amount of money that you receive. It's critical that you take the time to think about your taxes before your assets are divvied up.