Latest news with #financialmistakes
Daily Mail
3 days ago
- Business
- Daily Mail
The top 5 mistakes people make in a divorce that cost them thousands
Getting divorced can be an expensive experience, but experts warn that many don't realize the hidden traps that can rack up the bills. The average cost of a divorce in the US is a staggering $11,300, with lawyers' fees making up the bulk, according to personal finance site The Motley Fool. However, a marriage split is not just a one-off expense; there are often long-term implications too. Many women in particular are at risk of ending up worse off after divorce – especially if they have taken time off work to raise a family. Yet both men and women can end up regretting financial mistakes made during the sound and fury of splitting up. 'People making such mistakes often regret it long term, because they can be irreversible,' divorce lawyer Bari Weinberger told the Wall Street Journal. Experts argue it is important to be prepared and ensure you are completely informed about your financial situation. These are the top five mistakes they urge those embarking on a divorce to avoid. 1. Heavy spending One of the most common mistakes new divorcees make is splurging right after the papers are signed. Some take their settlements and throw a 'divorce party', or indulge in retail therapy after months or even years of acrimonious legal wrangling. Common post-divorce purchases include new cars that become unaffordable on finance plans. Another mistake is rushing to buy a new home too quickly, according to divorce coach Liza Caldwell. Caldwell tells her clients to wait for their lives and especially their finances to stabilize before buying a new property. Caldwell told the Journal that those rushing a fresh start can end up overpaying, or tie up too much of their money in their home while reducing flexibility elsewhere. However, costly spending mistakes can also occur just before a marriage fails. Weinberger warns that committing to expensive vacations or new joint debts such as a mortgage on a new home can complicate their process of dividing marital assets during divorce. 2. Hidden assets Some spouses will hide assets before they ask for a divorce in order to gain more from the overall settlement. A common tactic is giving money to friends and family on the understanding that it will be returned after the divorce is settled. Florida accountant Mirtha Valdes Martin told the Journal that she has frequently seen small business owners use this tactic to avoid a fair settlement. Martin said that one way to avoid becoming the losing party is to file for divorce first. Those who suspect their partner may be hiding assets can also seek a settlement that includes even division of assets discovered after the divorce is complete. There is also the option to hire a private investigator or a forensic accountant to get to the bottom of any suspicions. Many women in particular are at risk of ending up worse off after divorce New Jersey divorce lawyer Bari Weinberger says divorcees can regret their financial mistakes 3. Emotion bills Divorce can be a painful time but experts warn that allowing your emotions to prolong proceedings can rack up ever larger bills. Maggie Kim, author of the 'Divorce or Die' newsletter, told the Journal that she spent $500,000 on legal fees over a seven-year divorce process. 'Emotions were the biggest reason that my divorce and custody fight took seven years,' she explained. Now Kim tells her readers to draw on support from their friends and family rather than treating divorce lawyers like therapists. You won't feel better 'when you get a five-figure bill later because you spent two hours sobbing in their office — again,' Kim said. 4. Illiquid assets Illiquid assets such as stock options, individual retirement accounts and real estate, can be among the hardest parts of a divorce to settle. This is because by their very nature they cannot easily be turned into cash and split evenly. Selling stocks can stop an investment from growing over time and incur heavy transaction fees. Retirement accounts can also incur heavy penalties if withdrawn before retirement age. Financial advisor Stacy Francis told the Journal she asks divorcing couples to take all of these constraints into account when deciding how to divide their marital assets. For example, if illiquid assets are too big of a sum to be able to give up a claim to them completely, then 'it may indeed be worth waiting until they vest, mature or are able to be sold,' Francis explained. 'Negotiating for structured payouts or even a co-ownership agreement can be a creative workaround.' Maggie Kim spent $500,000 on legal fees over a seven-year divorce process 5. Underestimating expenses Couples who have been together decades can often forget a time before two incomes. Individuals going through a divorce may therefore underestimate how much it will cost to run a household alone again. Major expenses can include housing and health insurance, as well as discretionary spending such as restaurant meals and subscriptions. Rick Jones, a divorce lawyer from Seattle, told the Journal that his male clients can often misjudge the cost of both child support and running their own home. 'Fathers paying full or partial child support don't anticipate the additional cost of having a home big enough for their kids' visits,' he said. To avoid financial pitfalls later on, Jones urges divorcing couples to make realistic budgets setting out what cash-flow they will need to cover their expenses.
Yahoo
18-05-2025
- Business
- Yahoo
Gen Zers are missing out on hundreds of thousands in free money by ignoring this company policy
Gen Z's financial ignorance is resulting in the generation leaving thousands of dollars in free money on the table. For one woman, the 'gigantic money mistake' resulted in a loss of $60,000 from her retirement savings. Starting a new job is stressful. Not only do you have to find a groove with your tasks, but you also have to navigate office personalities, deal with return-to-office policies, and try to impress your new boss. That's not to mention the mound of paperwork like signing up for insurance and retirement savings, which for young professionals in particular, can be confusing. But putting it off can quickly result in a major money blunder. For one woman, that ignorance added up to a six-figure financial mistake. 'I found out, after having worked for my company for many years, that I was leaving behind 100% match on my 401(k),' Teresa Greenip tells Fortune. After landing a job at a commercial real estate firm, she neglected to take advantage of a retirement savings plan with a match program that in total would have been $60,000 in free money. Had it grown with her contributions at an average return rate, she would have amassed over $500,000 in retirement savings. Making this 'gigantic money mistake' was a wake-up call for Greenip, but it's a situation that is not all that uncommon. Nearly a quarter of all Gen Z employees aren't enrolled in their company's 401(k)—that's three times the rate of millennials, Gen X, and boomers, according to BenefitsPro. Moreover, 12% of Gen Zers neglect to participate in any workplace benefits, double the rate of other generations. When Greenip graduated from Emory University in 2004, her heart was set on a high-paying career in the corporate finance world. She checked all the boxes: she majored in business administration, served as a teaching assistant for tough courses like managerial accounting, and made the dean's list. However, once she landed a job in commercial real estate, Greenip prioritized paying off her personal and student loans before considering saving for retirement. And while prioritizing debt repayment may seem logical, it was exactly where she ran into trouble. Outweighing savings goals, even when retirement seems far away, can come back to hurt later in life. Gradually investing in a 401(k) can be life-changing by the time retirement arrives—and the earlier you contribute, the greater the compounding. Employers commonly match up to 50% of an employee's 401(k) contributions, up to a maximum of 6% of their salary. For someone making $80,000 who begins contributing to their 401(k) at age 25, they could gain over $300,000 in employer contributions alone, which can compound over their lifetime into millions of dollars. Greenip's oversight is not an uncommon one. While employer match programs may be designed to incentivize workers to contribute to companies' retirement plans, evidence suggests they only have small effects on participation and savings, according to Vanguard. Only about 54% of employees working at a company with a 401(k) match program are investing at or above the match threshold, meaning millions of Americans are missing out on potentially billions of dollars collectively in free retirement savings. If you are unsure whether your company has a 401(k) match policy, experts say contact your human resources team as soon as possible. If you haven't checked on your 401(k) in a while, it is always a good idea to make sure everything is invested properly. After maximizing an employer's match program, one might consider additional retirement savings, like investing in a Roth IRA. According to Boston College's Center for Retirement Research, their popularity has risen significantly among Gen Zers and millennials—from 6.6% participation? in 2016 to 19.2% in 2022. After realizing her mistake, Greenip decided it was time for a career pivot. She left her lucrative job, obtained her certified financial planner (CFP) certification, and made it her life's work to guide others on their financial journeys and help them avoid costly mistakes like hers. Now working as a financial planner at Aspiriant, Greenip says individuals must educate themselves. She herself listened to financial experts like Suze Orman and read investing books. For those who can afford it, Greenip says it's worth working with a financial advisor since they keep up with ever-changing best practices. She encourages all individuals to take stock of their inflows and outflows—and then set spending goals for a given year. Only then should you begin taking the baby steps of paying off debt and investing funds in brokerage or retirement accounts. 'All of this advice is not just for the wealthy, but it's for all of us, and the government has set up the rules to benefit all of us, to encourage us to save and invest,' Greenip says. "I think everybody can benefit from constantly revisiting their financial strategy,' she adds. Have you made the best of a financial mistake and are open to sharing your story? Email This story was originally featured on Sign in to access your portfolio
