Hello, and welcome to the Life By Design podcast, brought to you by Strategic. and welcome back to the Life By Design podcast.

Today, I'm w- here with Melissa Fernald. She is a senior advisor partner here at Strategic, as well as a certified financial planner, and also just recently got her certified divorce financial analyst.

Right? Analyst, yes.

It's- Yeah. a mouthful.

It is. That's, and that's why we use acronyms after everybody's names.

So- Yes. Well, thanks for coming on, Melissa.

Thanks for having me, Jay. Yeah.

I'm really excited about this, first podcast ever. first podcast ever.

Aw, that's great. I'm glad I could be here for you.

Same, Jay, same. Um, yeah, so we're gonna have a couple episodes with Melissa, but today specifically is gonna talk about divorce.

Um, Melissa specializes in divorce financial planning, and so we wanted to touch on that, and really maybe for our listeners out there, help you if you've unfortunately recently divorced and kind of thinking about what your next steps are. Mm-hmm.

Okay. Yes.

So I'm gonna kick it off here, and, you know, I think besides the obvious of the divorce, you know, why does a divorce become such a pivotal moment in a, for rethinking one's financial plan? Sure.

So, um, you know, divorce is a very life-changing moment comes with a lot of emotions. Mm-hmm.

Um, you know, there's fear, there's anger, um, guilt, grief, um, and it really, um, can change a lot financially. So a lot of times in a marriage, you may have one person that's really handling the finances, the day-to-day.

We call them the CFO, you know, of the household. How does this affect long-term goals?

Yeah, and so with that, like, what is, what's one of the first kind of mindset shifts that clients have to make? Like, w- you know, I know there's several, and you just named a few of them- Mm-hmm.

but what's the first one you think is the most helpful? Right?

Take a breath. Feel the emotions, um, and, and really avoid making any big life-altering decisions or changes.

Right? We see a lot, um, people, um, when they're going through a big life-changing event, they feel like they need to take action to, you know, make this huge change so that they can regain control.

And really, the advice would be to just stop, take a breath, wait on any big life-changing moments so that you can kind of settle into this new reality and understand what it means, where you are now, where you wanna be, and make thoughtful decisions- Hmm. um, about that.

And it's really just starting it with the basics. Um, understanding where you are today, financially.

What are your assets? What are your liabilities?

What are your income sources? Um, and just getting organized.

Yeah. That's, that's really, I think, the first step, and that will help give you the confidence that you need to move forward.

Yeah, and I think, uh, you can correct me if I'm wrong here, but some of that kind of, if you're, if you're in the middle of the divorce, maybe not towards the end, some of that's happening anyways. Right?

Yeah. And so, um, you know, if you're at the, the beginning of that decision tree of divorce, like, you're gonna have to do that anyways- Yes.

to get through, to get through the whole procedure of the divorce. Exactly.

Yeah. Yeah.

Um, yeah. And so, like, what do you think, if, if you, you know, there may be a couple, but, like, what are some of the most frequent money pitfalls that, that face, that, you know, people face immediately after, like, the settlement of the divorce?

Yeah. So, um, that's a good question, and, um, really it's one, making sure you have some liquidity.

Um, 2, you know, and then just understanding again some of those basics. What are my expenses?

You know, cause unfortunately bills don't stop through these life-changing moments. There's, there's no grace period there.

Um, so you, you really wanna understand what those are and what liquidity do you have available- Mm-hmm. um, you know, to continue paying those expenses.

Um, and then again, too, I'll just go back to, you know, the pitfalls of just not making any big decisions right up front. Right?

Just kind of let's get settled. Let's understand where we are, um, and, and settle into this new, you know, situation.

And then from there make some informed decisions. Um Yeah, I think it's tough, right, cause I think after the divorce it sometimes can feel like you're starting at 0.

Mm-hmm. Right?

Like, uh, I mean this is, for a lot of people, hopefully, right, after your divorce, this is the first time you've been divorced hopefully. Mm-hmm.

And, uh, it can be striking, like, trying to understand what your new life looks like. Looks like.

So, so, like, with that, how do w- how would a, how would someone prioritize their goals, uh, when the resources have just been split from a divorce? Mm-hmm.Yeah.

Um, so I think the, the first step is, um, is talking about those goals, right? What are those goals?

And, um, again, from there, just getting, getting organized. Understanding what are the new assets?

What are the liabilities? what are my income sources?

What are my expenses? So, the first step, um, is really just, you know, getting that organized and understanding that.

And then 2, what I always, um, like to suggest is, monitor your expenses for a month or 2. Mm-hmm.

Um, right? So, track em.

And you can use an app for that. If you pay everything with a credit card or a debit card, you can use that to help you organize things into different- Yeah.

buckets. But just give yourself that clarity on where the money's going, what you're spending on, um, for, you know, a month, maybe 2 months.

And then from there, um, we can use that, you can use that to create a budget. And I know everyone hates the B word- but it's really important, and it can really give you confidence- Yeah.

and empower you to make good decisions, right? And that helps take away the stress.

Yeah. If you know where your money's going, um, and you, and then you can sit down and look and say, Okay, um, what are my priorities?

What are the essentials? What just brings me joy and happy?

Right? Those are your non-negotiables.

And then where maybe can we cut back? This doesn't bring any value.

We don't need this. Um, put that budget together, and then from there you can create a really good solid plan going forward.

Yeah. It's interesting, right?

Cause I think it, even like, something that seems trivial like groceries, right? Like, your bill is completely different now, right?

Mm-hmm. Right.

So, understanding what that looks like, like electricity bill could be different. Like, though, I know those are small, but like, I think it's kind of, you know, the way you're explaining it, to me, it was like how to eat an elephant, right?

Like one spoonful at a time. Exactly.

And so, s- s- starting small and manageable- Exactly. things like grocery bills, electricity bills- Yes.

those things will be different, and now you can adjust for that. Yes.

Yeah. Small, mana- manageable steps, um, and then just, just tracking progress.

Mm-hmm. Um, you know, once you have that budget and you know what you're spending, then you can start onto the next step, which would be, you know, creating some goals.

And, um, a, a, a good first goal would be making sure you have that savings in the bank- Hm. And so that would be really the next step, is looking at what's our liquidity, where's our savings at?

Let's set some goals and then talk about small, manageable steps to get to that goal. Yeah, yeah.

And I think, you know, I know it's, it, there's all kinds of different recommendations, but I think the one that's always stuck out to me is, for that savings, uh, for your emergency fund, is kind of like 3 months, 3 to 6 months of what your, like, normal bills would be- Yeah. so that you can stay afloat if something were to happen.

Yes. 3 to 6 months is the general rule of thumb- Mm-hmm.

of what your expenses are. If you're now in a single household with one income, you probably wanna be on the longer end of that, somewhere around 6 months, and that can seem like a lot.

Yeah. Like, Geez, how am I gonna save that much money?

Um, and the important part is to just start somewhere. Just start somewhere.

It can be small, um, and what I always recommend is you do it automatically. Mm-hmm.

So, you set up, um, maybe an automatic transfer from your checking to a savings, or you can even do it from a paycheck sometimes. Yeah.

Go right into your savings. It's like paying yourself a bill.

You don't have to think about it. And even if it's a small amount, it's amazing to see how that'll add up and get you to that, to that goal.

Um Yeah, yeah, yeah. I like that too, you know, and that's something I've kind of incorporated, which is just, I just have the bank do it automatically.

Mm-hmm. They just, they move some money into my savings account every couple weeks when, you know, when we- Yeah.

know we're getting paid or whatever, and that has really helped. And I don't even really think about it much anymore, right?

Yeah. And it's nice.

Exactly. And that really goes into any of your, of your bills.

Automate. Yeah.

You know? Make, make things- Yes.

Automate. Hm.

You know, make, make things- Yes. Especially if you're new to this, especially if you're new to being the one paying the bills and managing, um, that responsibility.

Anything you can set up on autopay, bill pay, go ahead and do it. Um, or, okay, I set up everything on, on autopay.

Um, but then it's also a good practice, I think, especially as, as you are getting comfortable and, you know, you want to be more, um, knowledgeable, right, about just your day-to-day finances. You know, how's, how's my cash ebb and flowing?

It's also important, though, to set time, you know, maybe each week, each month, sit down and look at it. Mm-hmm.

Right? And that goes to that tracking.

Um, okay, I set my budget, how am I doing? And so, uh, you know, if, if budgeting is beyond you and you, and you haven't, like, touched base with a financial planner yet, um, th- you could just use your banking app y- usually for that.

Yeah. How am I tracking with it?

Yeah. Um, and, and listening to what's important.

um, it just becomes more and more natural. this is just something I know.

to your long-term financial security. that it'll tell you, Oh, hey, here's your spending for this past m- week or month.

Mm-hmm. Yep.

And then, and then go, okay, and then you can come to Melissa and you can say, Okay, here's what, here's what my budget looks like based on my last month's spending. Yes.

Yep, exactly. And, yeah, I guess one of the things I wanted to ask and kinda touch on, too, if you had any advice.

Yeah, that makes sense. So, a lotta time with large life events like this, specifically with divorce, a lot of emotion can play in, even after I've taken that breath.

So like, what are s- what's some advice that you would have to like kind of separate the dollars and the numbers, you know, from that emotion? Mm-hmm.

I think it's, um, 1, you know, um, validating the emotions, right? So I know, you know, one of, one of the first things I would do if I was sitting down with a client is really just hearing what's important.

Do you wanna travel? Yeah.

What are you worried about? What would make you feel more comfortable?

Mm-hmm. I think, I think, at least some capacity.

But then it's putting meaning to them. This is how those numbers relate to your goals- Yeah.

This is how it all fits in. Right?

So, Oh, yeah, I get that. That makes sense to me.

Um, you know, you, you tell me, My investments were up 10%. All right.

Right? Cool.

Yeah, yeah, right? What does that mean?

Yeah. Oh, but when we look at your long-term cash flow fore- forecast, this is the assumptions that we're using.

Yeah. So that, how that, that's how that fits in.

Oh, okay. Yeah.

And I think this is, you know, something we talk about a lot in retirement, but I think it fits really well here, is also, you know, one of the things we always ask folks is, Hey, what does your great life look like? Right?

And I think probably for you, too, in the divorce space, it's saying, Okay, I know it's hard to think about now, but what is, where do you wanna be? What are the goals?

What that goal is, what's your great life look like? Mm-hmm.

When, you know, when the clouds part and the sun's back out, what do you wanna do? If you have kids.

Do you wanna spend time with, you know, family? Like, what, what does that look you?

Exactly. Yeah.

So you mentioned retirement. Everybody wants to retire someday- Yeah, yeah.

So just get organized. If you have to split your retirement assets in half, um, that can r- you know, really change your readiness for retirement, your timeline.

And we work from there. Um, so, you know, I put a budget together.

Where are we now in that process? Um, and track that.

And, um, yeah, and then just understanding other goals. You know, it might be, When I'm ready, you know, I wanna, I wanna move, or, um, I still wanna contribute to my kid- kids educations.

Pat yourself on the back, you know. I mean, even with the savings- Or- Yeah.

Um, so all those, understanding all those different parts, and then kinda where we are in that now after, you know, the divorce is settled. Yeah.

So I guess to kind of wrap it up here, first step, take a breath, breathe, things will be okay. Yeah.

Budget. Get organized.

Yeah. Um, understand where the different pieces are, what the different buckets mean, how they fit into your overall picture.

What are, what are your assets? What are your liabilities?

What's your income look like? And then expenses, and creating that budget, tracking, um, and then let's set some manageable savings goals.

breaking it down into manageable pieces, and then celebrating the wins, right? Right.

That's not an easy task. Yeah, yeah.

like just setting like a, even if it's like a low dollar am- like, uh, uh, 500 bucks. Mm-hmm.

Let's do it. Or paying off a small debt.

Set- setting those small goals and then celebrating along the way, that's what builds hab- habits and consistency. Yeah, great.

Thanks, Melissa. Thank you.

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