Don’t let divorce devastate your finances – use these tips on how to manage money after divorce to build a firm financial foundation for your future.One of my friends is going through a devastating divorce, and money is one their biggest problems. Not only are the lawyers’ bills eating up their savings, my friend and her ex-husband can’t agree on how to divide the financial and other assets.
These tips on how to manage money after divorce will help you settle into your finances after the divorce is over.
In this article, guest writer Sara Collins will:
- Share a few divorce statistics
- Describe five ways to manage money after divorce
- End with a list of resources to help you manage money better, including a link to NerdWallet (a reputable financial website)
If you have questions at the end of this article, please feel free to respond. We can’t offer financial advice for specific situations, but we might be able to point you in the right direction.
How to Manage Money After Divorce
A guest post by Sara Collins (NerdWallet)
Statistically speaking, about half of all American marriages end in divorce. Given this fact, divorce has become part of the way we live, and planning ahead so you know how to manage money after divorce is wise. For many people facing the end of their marriages, it has been years or even decades since they’ve had sole control of their finances. If this applies to you, here is a game plan for managing money after divorce.
Understand your financial position. Once the dust has settled and you’re ready to begin taking back primary responsibility for your financial life, start out by evaluating your position. Chances are you and your spouse had joint assets and liabilities, such as jointly held bank accounts and investments, mortgages, college funds, pensions, insurance policies, and cars. When the time comes, you need to work out how these will be divided and what you will be held responsible for or benefit from. Once the terms of the divorce have been settled, you should be able to both analyze the present and plan ahead for divided assets and liabilities. The most important tip on how to manage your money after getting divorced is to understand your financial position.
If you have no money after divorce, read
Consult a professional financial advisor. After doing some homework of your own, it’s time to give yourself a break and let a professional help you manage money after divorce. A financial advisor can guide you through life decisions that you will now need to make and forge a roadmap for your financial future. When you let the advisor know about your long term goals, he or she can help you organize your resources. If you and your ex-spouse once shared a financial advisor, you may want to seek someone independent to help you manage your finances after the divorce.
Create a budget—and stick to it. After taking the former steps, work with professionals and other family members to create a steady budget that can take into account both the changes from divorce and your future planned financial improvements. With a financial plan in hand, be sure to stick to it and only modify it or depart from it when you think it necessary. Deviations from the budget may be inevitable, but make sure that you stick to it when possible; professionals and close family friends can help with advising you on this. The crucial point on how to manage money after divorce – especially if you have children dependent on you—is to ensure financial stability. It’s better to accept a reduced lifestyle and make cuts now than to hit a snag later to the detriment of you and the ones who rely upon you.
Ensure financial security for your future. Your financial security is likely to take a hit after the divorce. It’s easy to succumb to panic about this, but don’t let that happen. Instead, look to improve your wealth in a safe way. Depending on your situation, you may consider making low-risk investments, attain full-time work, seek part-time consulting or freelance opportunities, or go back to school to improve your employability and appeal. Be sure to speak to your personal financial advisor or your bank about any of these options. Be honest that you need help on how to manage money after the divorce! The good news is that there are more resources for investigating your options today, given the internet.
Does your future include school?
Prepare for a new lifestyle. Regardless of how you and your ex-spouse handled your financial affairs, you will be facing a new situation after the divorce. If your spouse handled the family purse strings, you need to commit to taking on the budget and bills yourself. If you already played a part in handling the financials, you need to reevaluate your goals and plans regarding life insurance, retirement, and children’s’ college funds. You may need to change investments, modify your living arrangements, or adjust insurance arrangements. Don’t let yourself become overwhelmed at the thought of managing your finances after the divorce. The important thing is to face change with an adaptable, positive, and proactive attitude. If you can do that, you are in a better position to manage money after divorce – and handle any new obstacles on the road ahead.
“After Divorce” Resources
How to Transition From Marriage to Divorce – an article here on New Beginnings. I interviewed Peggy Nolan about how she managed money and other aspects of life after divorce.
Women Empowering Themselves: A Financial Survival Guide – For Women at Risk of Drowning Financially Before, During and After Divorce by Antoinette Babek and Hollis Colquhoun.
If you know of other websites, blogs, or articles on how to manage money after divorce, please comment below!
Sara Collins is a writer for NerdWallet, a site dedicated to helping consumers learn about the best ways to save money.