How to Rebuild Your Financial Life After Divorce

Divorce advice. Money tips for women to help you recover financially after divorce and take control of your life.

Do you feel anxious, insecure and doubtful about your finances? Are you struggling to rebuild your financial life after divorce?

You’re not alone!

Many women struggle to get back on their feet financially after a divorce. Unfortunately, a lot of them are unable to get past their financial problems.

Unless you create a plan and take the right actions, you’re never going to recover financially from your divorce.

So if you’ve tried everything to take control of your finances, but nothing is working, here are some things you can do to improve your finances.

This post may have affiliate links. Which means if you buy anything using my links, I may receive a small commission.

How to Rebuild Your Financial Life After Divorce

1.  Scale Back

Trust me, I know how difficult this can be especially if you have kids. Divorce is hard enough without having to make some drastic changes in your life.

But sometimes, that’s the only way you can move forward or take control of your finances.

The first step is to do an inventory of your financial situation. Start by taking a look at all your expenses, income, assets and liabilities.

Use the questions below to help you gain some clarity:

  • What are your biggest expenses?
  • Where can you save some money?
  • Which expenses can you reduce or get rid off?
  • Which activities can you cut down on (yes, that includes extra-curricular activities for the kids).
  • Can you afford your home without child support or alimony?
  • Can you afford your car?
  • Can you afford the tuition for your kids (if applicable)?
  • Can you afford memberships or subscriptions to different clubs, gyms or anything else?
  • How much savings do you have?
  • Do you have an emergency fund?
  • Do you have a budget?
  • How much debt do you have?

After you complete this exercise, you should have a clear picture of your financial situation. Which means you can figure out where you need to scale back.

The only way you can improve your finances is by increasing the gap between your income and your expenses.

How you scale back will depend on your income and your personal circumstances. For some of you, you may need to downsize your home.

Downsizing makes sense if your rent or mortgage payment takes a large chunk of your income, or you can’t afford your home on your own.

Scaling back may also require you to relocate to a cheaper state or city. Just be careful not to make big decisions if you’re still struggling emotionally.

Make sure you think carefully before making any important decisions, or consult with a financial expert/professional.

2. Proactively Find Work/Take On More Work

Financial challenges after divorce is very common. One study shows about one in five women fall into poverty as a result of divorce.

It requires a big adjustment to go from a two-income household to a one-income household. That’s why I encourage divorced/single moms to find ways to earn an income or increase their income as soon as possible.

If you were a stay-at-home mom, this can be very challenging especially if you have been out of the workforce for a long time.

If you have an existing job, you can consider increasing your hours, working over time, moving to a better-paying job or even switching careers.

What is important is that you find a way to increase your income or to start earning an income as soon as possible.

If you have been unemployed for a long time, start by assessing your current skills to see what kind of jobs you can do.

You may need to take some courses or attend some training to help you reenter the workforce after a long time.

Research what is out there so you can come up with a plan to increase or earn an income. Beware of scams masquerading as work-at-home jobs.

Be wary of any job or opportunity that requires you to pay some upfront cost. There are always people who’d like to prey on vulnerable people, so be mindful of that.

There are legitimate jobs out there you just need to find them.

3. Reduce or Get Rid of Some Expenses

Another thing you can do to rebuild your financial life is to reduce or get rid of some of your expenses. This is a bit different from scaling back or downsizing.

Some things you can do to reduce or get rid of your expenses include:

  • Shop for competing prices for everything and never buy anything full price. This includes utilities,cars, insurance etc.
  • Become better at money management so you can avoid unnecessary fees like late-payment fees or overdraft/bank fees. I don’t want to remember how many times I had to call Wells Fargo because of their overdraft fee. Their fee is $35 per item. Think about that!
  • Stop using expensive forms of credit like payday loans or credit card advances. These forms of credit can carry very steep fees.
  • Automate your finances as much as you can to eliminate late fees and postage costs.
  • Reduce your transportation costs if possible. I know this one can be pretty hard to do but it’s worth mentioning.
  • Reduce your kids’ extracurricular activities. They don’t need to be on every team or play every sport. They also don’t need to join dance, acting, swimming or gymnastics classes. All those expenses can take a big chunk out of your income. Take a look at what you’re paying for and get rid of some of them (at least temporarily).

I want you to focus on big wins. Saving $200-$500 on your mortgage or rent, insurance or car payments, will do more for you than saving $2 or $5 clipping coupons or skipping lattes.

4. Get Rid of Debt/Liabilities

Unfortunately, it’s difficult to survive financially after a divorce if you are struggling with a lot of debt. If you have a lot of debt, one of your biggest priorities is to pay them off.

Start by setting small, realistic and short-term goals that will drive you to success and bigger goals.These small successes will encourage you to stay the course.

For example, instead of setting a goal to pay all your debt off in two or three years, you can start by paying off your smaller debts and gaining momentum.

Setting short-term goals will keep you motivated because the results are visible immediately, or you don’t have to wait a long time to see some results.

This is a good strategy to use if you have lots of small debts or outstanding bills.

Check out this post, The Ultimate Guide to Paying Off Debt For Single Moms for lots of tips and ideas.

If you have a lot of debt and you’re under a lot of pressure, consider getting rid of some unused or unwanted stuff.

This is a great time to declutter your home and life, and to change your mindset about stuffDecluttering your life and getting rid of unwanted stuff is probably one of the best things you can do for yourself.

A quick note about paying off debt: It’s a good idea to have an emergency fund before you start paying off debt. This will prevent you from taking on more debt when emergencies arise.

If you’re struggling with a lot of debt (credit cards,student loans, auto loans etc), make it a priority to pay off as much as you can in the shortest time possible. It’s a burden you don’t need to carry.

5. Create a Budget or Spending Plan

According the authors of The Millionaire Next Door, the wealthy budget too.

If you’re divorced or recently single, you’ll have to create a road map for your new life. This is a critical step in transitioning from a two-income family to a one-income family.

If you’re a divorced woman, unless you receive a big alimony and child support payments, you’ll more than likely be on a smaller budget,which means you’ll need to keep track of your expenses.

If you’re not used to budgeting or tracking your spending this may be a painful experience for you. 

Getting back on the right track financially means you have to curb unnecessary spending as much as possible. Budgeting is a helpful way to do this.

Okay, first let me say there are so many resources on budgeting that it can get pretty overwhelming. If you’re new to budgeting, the key is to keep it simple.

Here are some helpful posts to help you get started:

How to Make a Monthly Budget That Works

Free Download: Every Dollar Guide to Budgeting

15 Practical Budgeting Tips

I think that’s enough resources to get you started. There is to lot to learn about budgeting, but you don’t need to know everything, or all the different types of budgets to get started.

What’s important is that you know how much you bring home,how much you spend,and what you spend your  money on.

6. Be Positive and Enjoy The Journey

Have faith and confidence in yourself. Believe that you’re capable of turning your circumstances around.

Be willing to change, and be open to suggestions that will affect your life positively.

Having a positive mindset can make a whole lot of difference in your life. Don’t let anyone or your circumstances tell you what you can or can’t do.

Push self-doubt and other negative emotions to the side. Embrace the challenge and the process.

Financial recovery takes time so you need to be patient with the process. Don’t feel discouraged if things aren’t moving as fast as you’d like. What’s important is that you’re making some progress.

Also, remember that it’s difficult to get ahead as long as you’re financially dependent on your ex. So do whatever you can to take control of your finances so you can be self-sufficient.

If you’re wondering about how long it takes to recover financially after a divorce, the answer is, it depends. It depends on how bad your financial situation is.

It also depends on how quickly you can make the necessary changes and adjustments.

At the end of the day, there is no time frame to recover. For some of you, your progress may be slow (or appear that way), while others may be able to get back on their feet quickly.

But I want you to focus on what is important and that is, the fact that you’re making progress no matter how small.

As long as you’re not standing still, you are on the right path.

Are you struggling with your finances after your divorce? Let me know what you’re struggling with.

Recommended posts – mine and others:

After the Divorce: How to Secure Your Financial Future

Seven Must-Do Steps For Women Who Want Financial Stability Post-Divorce

6 Reasons Why Single Moms Struggle Financially

9 Surefire Ways to Become a Successful Single Mom

 

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