6 Steps To Getting Back On Track Financially After Divorce 

Once you've finished untangling your finances from your former partner's, it's time to develop a long-term plan.

Once you've finished untangling your finances from your former partner's, it's time to develop a long-term plan.

This article first appeared on Divorced Moms and has been republished with permission. 


Whether you've been married for six months or sixty years, divorce is never easy. Everyone who has experienced it understands the emotional toll a divorce can take, but you may not appreciate the impact it can have on your finances.

The process itself is often prolonged and expensive, and the aftermath may leave you scrambling to adjust to your new financial reality. With careful planning and a proactive approach, however, you can take control and get back on track quickly. If you're going through or have recently finalized a divorce, here's what you need to know to make sure you land on your feet.

How to Take Control of Your Finances After Divorce

Although a divorce represents a legal separation, this doesn't automatically extend to your finances. The first step after divorce, then, is understanding and taking control of your own financial situation. First and foremost, this means cutting the many ties that have bound you to your former partner, from joint credit cards and bank accounts to mortgages and utility bills.

You can't rebuild your finances if they aren't solely your own, and you could be put in a serious bind if your ex-spouse racks up debts on any shared accounts. Contact your credit card companies, banks and other relevant institutions and request that joint accounts be closed wherever possible. If closing isn't an option, consider transferring balances or having accounts reissued in your or your partner's name alone.

Develop a Post-Divorce Financial Plan

Once you've finished untangling your finances from your former partner's, it's time to develop a long-term plan. Review where you currently stand financially by documenting all income, expenses, assets and liabilities. Use this information to create a realistic budget for yourself, which will serve as your most powerful tool to help you stay on course and avoid many of the mistakes people make after a divorce.

If your income exceeds your expenses, plan to use the difference to pay down any outstanding debts as quickly as possible. If you find your budget is in the red, however, you'll need to either boost your income or eliminate unnecessary expenses. It's not unusual to feel lost or overwhelmed at this stage, so don't be afraid to reach out to a professional for guidance - the peace of mind may be well worth the added expense.

Rebuild Your Credit After Divorce

Once you've established your starting point, you can begin to work toward rebuilding a healthy, independent financial life. This often involves establishing or improving your creditworthiness, and the good news is you've got plenty of options. Consistently paying all your bills on time is, of course, the best place to start. If your budget permits, consider paying extra toward your debts, giving priority to the accounts with the highest interest rates.

Check your credit score regularly and take advantage of free credit reports to spot potential fraud or reporting errors, keep tabs on your progress and identify any problem areas that are affecting your credit. Another convenient way to build credit is to use a credit card for routine purchases and pay the balance in full each month. If you can't qualify for a traditional card, a secured credit card is a useful tool to begin building severely damaged credit.

Build a Financial Safety Net After Divorce

Once your immediate financial needs are met, you can turn toward preparing yourself for the future. Perhaps nothing is more valuable to your financial well-being than having an emergency fund stashed away, and it may not be as difficult as you think. Though you're free to set any goal you feel is achievable, most financial experts recommend saving about six months' worth of living expenses.

Going back to work or taking on a second job may allow you to fill up those coffers more quickly, but don't be afraid to get creative. Many recent divorcées opt to move into more modest living quarters, providing a convenient excuse to sell off some unneeded possessions. You may also find yourself with more free time, which you can put to good use by engaging in a money-making hobby or furthering your education.

Invest Wisely After Divorce

If you already have savings built up, don't let your divorce stop that money from working for you. Making smart investments is one of the most reliable ways to grow your savings and create a healthier, more sustainable financial life, but tread carefully. Your financial situation has likely changed significantly, so you'll need to make sure that your investments are in line with your goals and priorities.

If you find yourself trying to support a family as a single parent, you should probably steer clear of risky ventures in favor of safe, steady investments. If you have no such responsibilities, however, a divorce may afford you the chance to take on more risk and pursue new opportunities.

Manage Your Retirement and Insurance Post-Divorce

A well-funded retirement account may represent the single largest asset to be divided at the time of divorce, which is why it's essential that you and your lawyer address it carefully. Accounts that are generally considered marital property include private company pension and 401(k) plans, IRAs and military or government employee retirement plans, among others.

Be sure that both you and your lawyer are clear about what you are or are not entitled to and that all proper procedures are followed in staking your claims. Managing your life insurance can also be tricky depending on the policy and the court's orders, so be sure to review your insurance with your legal counsel to make sure your policy is set up correctly.

If you're going through or recovering from a divorce, it's easy to feel overwhelmed. In addition to dealing with the turbulent emotions that often come with a separation, you'll also be tasked with navigating a seemingly unending stream of legal, logistical and financial issues. However, by taking control early and implementing the simple tips above, you can successfully work through the divorce process and emerge with a strong, healthy and independent financial life.


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