The end of the year is always a busy time for finances—taxes, retirement contributions, holiday spending, but if you’re going through a divorce, these decisions can feel overwhelming. Proper planning now can reduce stress and help you start the new year on a solid financial footing.
As a Certified Divorce Financial Analyst (CDFA), Barbara Shegog helps clients understand the financial implications of divorce and make informed decisions. Here are six steps to help plan your year-end finances during this transitional period.
Step 1: Review Your Income and Expenses
Take stock of all income sources and upcoming expenses. Keep an eye on changes related to divorce, such as:
- Spousal or child support payments
- Adjusted household income
- New recurring expenses like rent, utilities, or childcare
Tip: Create a simple spreadsheet to track income vs. expenses for the next 3–6 months.
Step 2: Update Your Budget
Divorce often changes your financial landscape. Adjust your budget to reflect your new reality:
- Prioritize necessities over discretionary spending
- Set aside funds for short-term goals (holiday gifts, debt payments)
- Continue contributing to long-term goals (retirement, emergency fund)
Tip: Use the “50/30/20” rule as a guide: 50% essentials, 30% discretionary, 20% savings/debt repayment.
Step 3: Consider Tax Implications
Year-end is the ideal time to review taxes. Divorce may impact:
- Dependent exemptions
- Alimony and child support reporting
- Retirement contributions and deductions
Tip: Schedule a quick check-in with your tax professional before year-end to optimize deductions and credits.
Step 4: Review Retirement and Investment Accounts
Dividing retirement accounts can be complex but crucial. Consider:
- Transferring accounts through a Qualified Domestic Relations Order (QDRO)
- Avoiding early withdrawals to prevent penalties and taxes
- Rebalancing investments for your post-divorce goals
Tip: Review beneficiary designations to ensure they align with your new circumstances.
Step 5: Manage Debt Strategically
Debt can complicate post-divorce finances. Focus on:
- Clarifying responsibility for existing debts
- Prioritizing high-interest debt repayment
- Planning year-end payments to reduce interest or fees
Tip: Create a “debt snowball” or “debt avalanche” plan to systematically pay down balances.
Step 6: Plan for the Holidays
Holiday expenses can add stress. Plan wisely:
- Set realistic budgets for gifts, travel, and celebrations
- Communicate with co-parents about shared holiday expenses
- Avoid overspending to reduce financial stress in January
Tip: Consider low-cost, meaningful ways to celebrate that won’t impact your budget.
Year-End Financial Planning Checklist for Divorce
| TASK | ACTION |
| Track income and expenses | Create a 3-6 month cash flow spreadsheet |
| Update budget | Adjust for new expenses and savings goals |
| Tax planning | Review dependent claims, alimony reporting, and deductions |
| Retirement accounts | Verify QDROs, avoid penalties, update beneficiaries |
| Debt management | Confirm responsibility, prioritize high-interest debt |
| Holiday planning | Set realistic budgets, coordinate shared expenses |
Take Control of Your Year-End Finances
Year-end financial planning during a divorce can feel overwhelming, but taking proactive steps now can ease stress and safeguard your financial future. At Divorce Resolutions of New England, our Certified Divorce Financial Analysts (CDFAs) work closely with you to guide budgeting, taxes, retirement, and more, helping you make informed decisions and enter the new year with confidence.
Contact us today to start taking control of your financial future.
