We all know divorce can be expensive, but it can also do a number on your finances moving forward. You may end up on a shaky financial footing if you’re not careful.
It’s a costly process: you may have to relocate, your tax status may change, and you may lose assets you likely need to replace. You may even have to pay all the bills with a single paycheck for the first time, or face new alimony or child support payments.
You probably have some work to do to rebuild your finances post-divorce.
It’s important to focus on your goals, on where you want to go. Before long, if you do this, you’ll be able to reflect on where you’ve been and where you were. With that in mind, here are four things you can do to help your cause.
Rebuilding Finances Post-Divorce:
It’s often an uphill battle. It takes work and determination. The good news is, you can revive your finances after a divorce.
A New Budget
Your monthly expenses have changed now that you’re no longer married. Perhaps they even look drastically different.
This presents you with the perfect opportunity to assess your cost of living and to make sure you don’t overspend. How many of us have subscriptions to streaming services we never use, or spend too much eating out all the time?
If you have no idea how to start tracking your budget and setting limits, don’t worry, there’s an app for that. Actually, there are many, many apps for that. Which one you choose depends on how much money you have, what you need, and other
specifics of your situation.
Some simply track money coming in and going out. Often, it’s enough to see the numbers laid out to jolt you into action. Others help you save, cut costs, invest, and much more. These tools often offer a good way to rebuild your finances after a divorce.
Save If You Can
Maybe you emptied your savings to pay for a divorce lawyer or lost a chunk of your retirement funds in the settlement. Recent divorcees often find themselves in precarious financial positions.
Setting both long- and short-term saving goals is essential to re-establishing financial security. Many experts recommend having cash savings equal to three to six months of income. That’s not always feasible for many of us, but it’s not a bad goal.
Banks or other financial institutions often offer free initial consultations with investment professionals. They can assess your situation and offer advice to help you get started. Every situation is different, but it’s a good idea to have a plan.
Related Reading: How are Assets Split Up in Divorce?
Re-establish Credit
It’s probably no surprise that divorce also often impacts your credit rating.
Having a good personal credit history is vital in many areas. It may impact renting a new place or securing a home loan. The same goes for getting a new car or financing a furniture purchase. In some cases, credit scores even impact your job prospects.
Even with good credit, keep an eye on it. Pay your bills on time, keep up with child or spousal support payments, and avoid carrying unnecessary debt.
Divorce doesn’t automatically change any financial agreements.
In many cases, the court may award a home—or car or other significant assets you still owe money on —to one party. The divorce decree will likely include language that your spouse must refinance, usually by a specific date.
If that happens, great. Just know that it doesn’t always go as planned. Because if they don’t abide by the decree, you’re still on the hook, fair or not.
Establishing and maintaining your credit will help you rebuild your finances after a divorce. Like budgeting, you have countless apps and services to choose from. Many tips and strategies can also help boost your credit.
Make a Clean Break
Making a clean break after divorce goes a long way toward reviving your finances.
Close all joint accounts. Remove your name from titles, registrations, and deeds. If you’re on any loans, refinance them with your name removed.
Tying up loose ends not only keeps your finances tight and in check, but it may also help you move on emotionally. It offers definitive closure.
Rebuilding your finances post-divorce may feel impossible, but you can do it. With planning, discipline, and maybe some professional help, you can start to regain your economic footing.
Related Reading: How Much Does Divorce Cost?
