Going through a divorce can not only scar you emotionally, but can wreak havoc on your finances as well.
You may be left feeling confused, overwhelmed, and with a complete lack of know-how in rebuilding your financial situation. But don’t panic — breaking up doesn’t have to mean you’re broke forever. Check out these tips to learn how you can start regaining your financial footing after a divorce.
In your marriage, you likely relied on two incomes to make ends meet. But once your divorce is settled, you may need to adjust to a new standard of living. The best way to ensure you’re financially healthy is to create a new monthly budget. Take an honest look at how much you earn versus spend in a month. This will give you an idea of how much money you have to put toward other financial responsibilities like home or car repairs, saving for the future, or even covering the expenses of your children.
If you find you’re spending more than you earn, consider picking up a side hustle for some extra cash, or look at your list of expenses and decide where you can cut back. How much do you cook at home instead of eating out? Do you find Amazon boxes on your doorstep often? While it’s always nice to treat yourself, staying within your budget may require some sacrifices, and discretionary expenses are the easiest to sideline for a while.
Finally, if you were left with debt from your marriage, start planning how you will pay it down now. Late or missed payments can ruin your credit score, and interest is no joke.
Speaking of credit scores, you might want to check the health of yours. Your creditworthiness is important, particularly when it comes to reaching larger financial goals like financing a car or buying a home. If your credit score took a hit during or after your marriage, work to rebuild it by making all monthly payments on time, keeping credit card debt as low as possible, and reading through your credit report regularly to ensure it’s clean of errors.
Change is hard. Don’t forget to give yourself some grace as you transition from married life to being divorced. It’s okay if you’re experiencing grief, anger, loss, or just feeling drained. Nothing is more important than taking care of yourself. To keep you from feeling overwhelmed while helping to rebuild your financial confidence, set small, attainable goals. For example, rather than focusing on paying off an entire credit card balance, consider saving just $1,000. Every win achieved will inch you closer to a better financial life.
Even if you're taking small steps towards recovering financially from divorce, don’t be afraid to dream big. While you were married, you may have had certain financial goals with your spouse. But now that you’re on your own, those goals could have changed. Do you still want to go back to school? Maybe you’d like to travel more. Determine what your new life will look like and start to plan what you’ll need to save to maintain it. It doesn’t have to be immediate. You’d be surprised how quickly saving a little each month can add up.
Once you have a handle on your day-to-day finances, it’s time to think about securing your financial future and retirement. Though it may be hard to prioritize at first, having a plan will make you feel more in control. If you already contribute to a retirement account, make sure you check it regularly to ensure you’re on track to meet your goals. And don’t forget about your emergency fund. A good rule of thumb is to keep between three and six months' worth of expenses in your savings for a rainy day.
If you have no idea where to start or could just use some extra help strategizing, consider hiring a financial advisor.
The bottom line is that divorce can be both emotionally and financially stressful. But luckily, many of the pitfalls can be avoided by taking your time, saving, and planning ahead for your financial future.