21 Financial Steps to Empower You After Divorce
Sometimes in a marriage, the lack of clarity, the failure of any way forward, and the clash of values cause a couple to divorce. Of course, this results in one of the most stressful things that a person could go through — especially when the money is involved. However, in this moment of complete despair, you have the chance to regain control of your financial life and create the best future ahead of you.
If you want to know how to regain control of your money, look no further. Here are 21 suggestions to help you strengthen your financial plan after divorce and rebuild your life.
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Assess Your Financial Situation
The first stage is always assessing one’s financial position at the moment. This includes listing all the available assets, liabilities, and income-generating activities. Doing so will, in a way, give you a better view of your financial situation and what you ought to do to improve it. Matt Mayerle, Personal Finance Editor at CreditNinja, suggests, “Start with a comprehensive financial assessment. Knowing where you stand is critical to making informed decisions moving forward.”
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Separate Joint Accounts
It is high time that you opened different accounts from those you operated with your (soon-to-be) ex-spouse. This ranges from bank accounts, credit cards, and loans from financial institutions. Keeping a joint account active often creates more problems, and could hurt your credit rating if your ex does not pay a jointly owned bill. At SAS, we know you may have questions about this. So we recommend you talk with a lawyer to know when and what to create.
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Establish Your Credit
If you relied on your spouse’s credit during your marriage, now is the time to establish your own. Start by applying for a credit card in your name or taking out a small loan. Use these responsibly to build your credit history. It’s not just about getting a card, it’s about proving your financial reliability to future lenders.
- Review Your Credit Report
Attaining a great credit score, perhaps even as much as a 700 credit score with collections, requires prudent discipline. The first step toward achieving this is to request a copy of your credit report from all three major credit bureaus—Experian, Equifax, and TransUnion. Review it carefully for any errors or discrepancies. You may even learn that your spouse, unbeknownst to you, has opened up lines of credit in your name. If you find inaccuracies, dispute them immediately to prevent further damage to your credit score.
- Set Up a Budget
You must come up with a budget that captures your finances after a divorce. Write down all the income earned and expenses in the same month, and look for areas where you can save money. This will assist you in knowing what you must have to live only within your means and to begin saving for your future. If this is daunting, and often it is, SAS recommends you ask someone you trust to help you analyze the numbers and do the projections with you. Don’t rely on yourself.
Check out “How Long Does It Take to Get Over a Divorce – and 4 Signs You Are On Your Way.”
- Prioritize Debt Repayment
As you separate, debt may become a considerable concern. One should aim to pay more to the credit card and other charges with high interest rates. Using this strategy, you’ll be saving costs in the future, and, at the same time, increasing your financial security. SAS recommends you focus on what’s costing the most and tackle that first. You may be able to move debt around to save you money. Consult with a financial pro on how to tackle your debt. - Build an Emergency Fund
An emergency fund provides some sense of security because life is unpredictable. Generally, aim to set a reserve that can cover at least three or six months’ expenditure. Learn to start saving little by little. And of course, you cannot do this until you learn what your expenses are for a month. (See budget, above, #5). - Reevaluate Insurance Coverage
Divorce often necessitates changes in your insurance coverage. Review your health, life, auto, and homeowners insurance policies to ensure you have adequate protection. You may also need to update beneficiaries on your life insurance policies. Contact your insurance agencies and discuss with them your options now that you are becoming a single woman.
Feel less alone and read “The Truth About Starting Over After a Divorce at 45”
- Consider Health Insurance Options
If you’re currently on the health insurance provided by your former spouse, look for another cover. Among other places, you can get it from your employer, COBRA, or the Health Insurance Marketplace aka Obamacare. It is imperative to ensure that health insurance does not elapse. It used to be we had few choices with health insurance. But with the arrival of Obamacare or the Affordable Healthcare Act, thank goodness, we do have choices other than relying on Cobra, which can be very expensive. - Have Your Will and Estate Plan Updated
Unlike intact families, divorce causes a shift in family structures and will likely require revisions to wills, estates, and powers of attorney. It is recommended that one seek the service of an attorney for advice on how to protect one’s assets, as well as state your intentions in the best and most comprehensible manner for the future. - Open New Financial Accounts
For divorce, it is advised that one separates financially from the ex-spouse and obtains new accounts in one’s own name as soon as possible. But make sure, SAS advises, that you check with an attorney on when best to do this. This includes but is not limited to opening new checking, savings, pension, retirement, or trading and investment accounts. - Monitor Your Credit Score
Your credit score plays a major role in your financial future, and therefore, it’s important to monitor it. You can do this for free or decide to pay a fee for credit monitoring services that will enable you to know any changes in your score and act accordingly. - Do Not Make Major Financial Decisions in the First Year of Divorce
Divorce and the recovery stage that follows it, is an emotionally sensitive stage. it is quite common to make impulsive financial decisions that you might regret later. Allow things to settle, for you to get anchored again, before you start spending on a house and other fixed investments that are expensive to own. At SAS, we recommend that no big financial decisions be made until at least a year post-divorce.
If you are struggling after your divorce, learn about “The Stage of Grief in Divorce, and How Long They Last.”
- Seek Financial Advice
Seek professional help from a financial planner if you’re uncertain about these matters after a divorce. A professional seasoned in the divorce and recovery process will provide direction and planning in regard to your goals and help in decision-making on complex financial matters. Don’t try to do these things alone.
- Consider a Side Hustle
Getting some economic security after a divorce may mean getting another source of income. This is why one may opt to find another high-paying job or consider a side hustle to help make ends meet. This extra money can be used to clear bills or other expenses, build an emergency fund, or make investments. At SAS we know that a side hustle provides additional income to help you diversify your financial portfolio. It may also build your sense of confidence that you are not dependent on just one thing.
- Rebuild Your Credit
If your credit took a real hit during your divorce, it is time to start reversing the damage. Make sure you have a small amount outstanding on your credit cards, always ensure you make your payments on time, and only apply for credit when needed.
- Plan for Retirement
If you have been provided with a portion of your ex-spouse’s retirement accounts, you should roll the amount to a new IRA or any other retirement plan. There are no taxes or penalties involve if you roll your IRA over to another IRA or retirement plan. If you are still in employment and earning an income, you should strive to contribute the most to your retirement savings. - Reevaluate Your Living Situation
You may require a change in your housing status after a divorce. You can continue to reside in the matrimonial home or relocate elsewhere. Make sure that housing expenses are affordable; do not take on much debt for it. Again, consult with a savvy financial pro to help you determine what is right for you. - Educate Yourself Financially
Reduce your vulnerability by getting more knowledgeable about issues related to personal finance. Thankfully, there are many books and online courses that can be effective in helping you learn. Don’t tell yourself you are going to do everything at once. Again, reach out to trusted people who can help you manage your money and who can educate you step by step. - Stay Organized
Organize all your financial documents, including tax returns, bank statements, and policies. Getting organized will assist you in preventing a lot of issues related to handling your financial resources and also help you control your financial resources well. - Practice Self-Care
Financial autonomy after a divorce is not only about money; it also means taking care of yourself. Just like in any other legal process, divorce can be emotionally draining; thus, it is important to take care of yourself to avoid breaking down. Exercising, learning new skills that excite you, and distracting yourself with movement, will help build your bandwidth and nurture your strength in character.
For inspiration, read our““100 Must Do’s for the Newly Divorced Independent Woman.”
Building a Strong Financial Foundation for Your Future
For most of us, divorce is a shocking life event. But you can create a healthier financial framework as a result of one. The 21 steps discussed above will get you thinking about ideas to follow through on as you seek to recover your life and destiny. Financial empowerment is a process and a journey. It may take a while and may call for commitments, but be assured, with hard work, the right people around you, and focus, you’ll gradually be on the path to financial freedom and a less stressful life.
At SAS, we know the key to bouncing back financially after a divorce is a commitment to yourself and a recognition that many good people can help you. Again, don’t tell yourself you have to do all of this alone. Find the right mentors to lead and guide you. Your precious future depends on you opening up and getting help.
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Choose not to go it alone.
Since 2012, smart women around the world have chosen SAS for Women to partner with them through the emotional and oftentimes complicated experience of divorce. SAS offers all women six free months of email coaching, action plans, checklists, and support strategies for you — and your precious future. Join our tribe and stay connected.
*SAS continues to support same-sex and nonbinary marriage. In this article, however, we refer to your spouse as husband/he/him.
