Inflation proving to pose an impact on divorcing couple

By Andrew Zashin*

It feels today as if inflation is everywhere. You read about inflation in the paper, hear about it on the news and feel it in your pocketbook. Just this week, Sept. 21, the feds raised rates the highest its been since the global financial crisis in 2008. In other words, rising inflation is impacting our lives in multiple ways. For individuals contemplating divorce, it is important to consider both the negative and positive effects inflation may have on a divorce settlement.

Let’s start with the good news first. Home values remain high in part due to inflation. According to the Federal Reserve Board, the median sales price for a home located in the Midwest was $412,400 as of June. For many couples, the marital home tends to be the largest asset that the marriage holds. This means that a divorcing couple who agree to sell the marital home, can take advantage of the current inflated market and likely obtain top dollar for the marital home.

Here’s the bad news. Separating couples may find it difficult to secure new housing following the sale of the marital home. Higher mortgage rates and home prices are reducing affordability for buyers and driving up demand for rental accommodations. However, those individuals who can wait out the inflated housing market by living with friends and family can fare well following the sale of the marital home.

In other not so great news, separating couples are going to find that their dollar isn’t going as far as it once did. It is normal for separating couples to feel some financial pinch since uncoupling typically results in a reduction of household income (two incomes divided by two) but an increase in household expenses given the running of two households. However, due to inflation, that financial pinch has been upgraded to a financial squeeze. According to Reuters, food prices increased more than 11.4% over the past year. Further, household furnishings, motor vehicles, prescription costs and health care prices all increased by at least 0.4% over the last month. This means that a newly single individual will not only have to deal with the loss of their former spouse’s income, but will also have to manage an increase in regular household expenses.

If you are considering divorce in this current economy, it is a good idea to not only speak with an attorney, but also a financial planner. Both professionals can assist you in deciding what assets of the marriage will help you the most while also helping you understand your post-divorce financial life.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:05-05:00September 23rd, 2022|Divorce, Financial Wellness, Inflation, Separation|

Managing Your Financial Wellness During a Pandemic

By guest authors, Michelle L. Taylor and David J. Rubis from Fairport Wealth*

Many of our clients have inquired about their finances during these uncertain times. To help, we asked Michelle L. Taylor, CRPC® and David J. Rubis, AIF® of Fairport Wealth to discuss some tips and strategies on managing your financial wellness during the COVID-19 pandemic.

We have entered a new era where a National Pandemic has our portfolios decreasing, we’re confined to our homes, and we are all experiencing increased stresses due to lost wages or work. The American Psychological Association (APA) reports that, in normal circumstances, over 3/5 of Americans cited “money” as their biggest cause of stress – accounting for 70-95% of doctors’ visits. That only starts to increase as you add in the unchartered territory of a worldwide pandemic. So, how can you manage your health and your finances in a time where both bring a lot of uncertainty? Control what you can control. It all starts with your P.L.A.N to protect your family.

P – Prepare for the unexpected.

Review your current financial situation and make sure you have a plan, that you’re actively executing on that plan, and that you are setting realistic expectations. Make sure you are up to date on your portfolio, income, expenses, life insurance, beneficiaries, estate plan, health care, business, education expenses, etc. If you feel you do not have a clear picture of what that looks like, or you feel you have not taken the necessary steps to put protections in place, ask your advisor. They can work with you to make sure you can still achieve all of your financial goals for your family.

L – Leverage this opportunity to talk to your family about finances.

According to the APA, 31% of Americans report that money is a major source of conflict in their relationships. Make sure you have an open dialog with your parents, spouse, ex-spouse, and children. Start setting clear financial expectations. If you have not traditionally been involved in the financial part of the relationship, now is the time to learn. You don’t want to be caught off guard if something happens to the person who traditionally takes care of the financials. Educating your family about your financial plan is one of the best gifts you can give them. It will help them feel empowered, enabling them to make well informed decisions about the finances should the situation arise.

A – Asset Allocation

As it specifically relates to your portfolio, you want to revisit and make sure you are appropriately invested in a diverse portfolio, one consisting of cash or short-term instruments, bonds, & stocks. How quickly we forget when the market is strong, we get a false sense of security. Everyone is unique in what they will need to accomplish their goals. So, make sure you find an advisor that can help review, and if needed, make the necessary changes before it is too late. Preparing for the unexpected is directly tied in with your asset allocation. You want to make sure you have enough savings to get you through 3-6 months should you lose your income. This money should not be tied to the market.

N – Needs Analysis

In times like this we need to get back to the basics and really discuss what do you need right now to keep you and your family safe. It is a good time to cut back expenses and really decide what is necessary for your day to day living. Easy places to start looking are those direct payments for services that automatically hit your credit card or your bank account. For example, now may be a good time to stop any of your club memberships (especially if they are closed), or unnecessary movie rentals. Be thoughtful of your grocery bills and family menus. What services could you eliminate for a period of time and do yourself to save on monthly expenses. Once you go through this exercise, you will realize quickly, most of your expenses fall in the “Want” category not the “Need” category.



*If you’d like to discuss the wealth and wellness of your family in these uncertain times, contact Michelle at 216-431-3898 / michelle.taylor@fairportwealth.com or David at 216-431-2587 / david.rubis@fairportwealth.com. www.fairportwealth.com

Securities offered through HighTower Securities, LLC member FINRA/SIPC. HighTower Advisors, LLC is a SEC registered investment advisor. HighTower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor before establishing a retirement plan.

2023-11-10T13:38:09-05:00March 30th, 2020|Financial Wellness, Pandemic|
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