Home Our Blog How to Get Back on Your Feet Financially After a Divorce
While no one plans to fail, thousands of marriages end in divorce every year. These events create upheaval in a person’s life, affecting everything from their emotional well-being and social life to their finances. Moving on after a divorce can be the challenge of a lifetime—and for those who have relied on their spouses for financial support, it may be almost impossible to pick up the pieces and move forward.
If your finances have been derailed by divorce, it doesn’t have to affect the rest of your life. With prompt action and a spirit of acceptance and grace, it’s possible to move smoothly into your new normal. If you’re struggling with money after a divorce, these steps may help you get back on solid ground.
Create a Budget and Stick To It
Now that you and your spouse are living separate lives, it’s time to re-evaluate your income and expenses. Most people experience a significant decrease in income after a divorce, and for stay-at-home parents, the shortfall can be severe. In these situations, budget adjustments are crucial. Whether you have sole or shared custody, or you’re paying spousal support, having dependents comes with many financial obligations.
Learning to accept a changing reality is difficult, but it’s the first and most important step in rebuilding a normal life. By creating a budget that accurately reflects your financial status, you’ll gain the confidence needed to move forward. To schedule a divorce consultation and learn how to get your finances in order, contact us today.
Focus on What’s Important
Moving on after a divorce requires one to reassess numerous things—their priorities included. For instance, if you’ve grown accustomed to regular spa days or vacations, those may have to wait until your finances are back in order. Getting back on track may mean making some difficult choices, but mental, physical, and financial stability should come first. If something, including your spending habits, isn’t serving you well, it’s time to eliminate it from your life.
Pay Down Debt First
It’s quite common for people to end up in debt after a divorce. Not only do they have to pay legal fees, but they must also find new housing, new modes of transportation, and pay other expenses that can quickly add up. There are several ways to settle debt, such as refinancing, loans from family members or friends, and cutting down on spending. Tackling debt head-on will boost your confidence and help you save money by minimizing late fees, penalties, and interest.
Boost Your Credit Score
A primary reason for divorcees to tackle debt is the effect it has on credit scoring. Good credit is extremely important—it can help you buy a home, rent an apartment, qualify for loans, or buy a new car. Now that you’re on your own, raising your credit rating is one of the best things you can do for your finances.
If you are like thousands of others who don’t have a credit score, now is the time to build one. Even if you’re not planning to finance any major purchases, there’s no way to predict the future. When newly divorced people take the time to strengthen their credit, they’re taking a step toward a more stable financial future.
Generate More Income
Making more money isn’t always easy, or even possible. Stay-at-home parents, for instance, often have a hard time re-entering the workforce after they’ve taken years off to build families and further their spouses’ careers. However, it may be beneficial for them to learn skills that make them a more marketable job applicant, or to strengthen qualifications they already have. Consider becoming a consultant in a field in which you already excel or turning a hobby into a source of income. When there’s more money coming in to go along with spousal support, budgeting and debt payment becomes easier.
Spend Money Wisely
Emotions run high during even the most amicable divorces, and many indulge in retail therapy to make themselves feel better. While the idea of a shopping spree or a vacation may sound great now, it can have long-term financial effects. While the occasional treat won’t matter much, it’s best to consider finding a positive, non-monetary way to lessen the pain of divorce.
Find Alternate Accommodations
Finding a new living situation after a divorce is one of the most challenging steps you’ll have to take, but it’s a crucial one. It’s important to live somewhere where you can rebuild a sense of emotional and mental well-being as you move on. If you’ve shared a home with an ex-spouse, start the change of ownership process as quickly as possible. However, if you got the house in the divorce settlement but can’t afford the mortgage, consider getting it refinanced or selling it and moving somewhere more cost-effective.
If you’re forced to buy or rent a new home, it pays to be as logical and rational as possible. Be sure to budget for utilities, maintenance, renter’s coverage, or homeowner’s insurance, as well as rent or a mortgage payment. Even if it isn’t your dream home—and it feels like a step down from the lifestyle to which you’ve grown accustomed—remember that it won’t last forever.
Getting Back on Track After a Divorce: It’s Tough, But Worthwhile
Most people, even those who were previously well-off, tend to struggle after a major life change such as a divorce. Regaining your financial footing can seem difficult, if not impossible, but it doesn’t all have to come at once. Take things as they come, give yourself some grace, and count on your friends and family for mental, emotional, and financial support when it’s needed.
Ultimately, financial planning and follow-through are the keys to rebuilding your financial future after a divorce. At the Law Office of Shelbie Hankey, we are honored to help our clients regain control of their finances, especially after the dissolution of a marriage. If you would like to speak to a legal professional in person, we are here to help. Request additional information by phone or schedule an appointment via our online form.
