What steps can I take to rebuild my finances after a divorce?
A divorce can be devastating on your finances. In a divorce, many people will lose half, or even more, of everything they have saved and worked for over their lives. Compounding the matter, a divorce will often come at significant cost to both parties. Despite these financial challenges, there are steps that divorcing spouses can take to quickly bounce back and recover financially post-divorce.
- Set obtainable goals: It can be easy to become overwhelmed when faced with such daunting goals as paying off your mortgage or your entire credit card balance. To avoid burn out, start by setting small, obtainable goals. For example, set the goal of saving $1,000 or paying $500 more than the minimum payment on your credit card. Once you achieve these small goals, you will feel empowered to tackle an even larger one.
- Balance your budget: Now is a great time to inventory your income and expenses. Your budget will likely change post-divorce. Take a close look at your expenses and put a freeze on any discretionary spending during the recovery period. With an accurate look at your expenses, you can make important decisions as to whether you should consider a change in job or downsizing.
- Ensure your accounts are set up correctly: Your finances were likely intricately tied to your former spouse and post-divorce it will be critical to untangle your accounts. Consult with your divorce attorney to make sure your accounts are titled to you alone. Check your retirement accounts as well as any investment accounts, property, and the like.
- Make a new financial plan: You and your spouse likely had a set of financial goals. These goals may have included saving a certain amount, fulfilling dream vacations, retiring at a certain age, and the like. Now is the time to create your own financial goals. Some of your goals may overlap with old ones, while some may be completely new. Take control of your life post-divorce and identify not just your financial goals, but what you want out of your future.
These four steps are just a start to rebuilding your life post-divorce. Contact a divorce attorney for assistance with your divorce and life beyond divorce.