
Annoyed unhappy married couple arguing in lawyers office get divorced, angry family spouses split up having disagreement disputing about breaking up and divorce settlement, legal separation concept
Divorce brings unforeseen financial challenges. You must plan adequately lest you run into a mess. Read our blog for practical tips to get on top of your finances.
Strategies To Manage and Navigate Financial Duties After Divorce
Divorce rates are high worldwide, and you may never know when you’ll fall become one of those numbers. As much as you married with the intention of staying together till death, things may go south sooner or later.
About half of all first marriages end in divorce, while more than 50% of second and third marriages fail.
Besides the emotional turmoil a divorce brings, you’ll often have to grapple with financial difficulties. Perhaps you’ve enjoyed several years of shared responsibilities, dividing household bills between you two. Or you focused on raising the kids while your spouse provided for the family.
After separation, a wave of financial uncertainties may ensue, potentially throwing you off the balance. Even the most amicable divorce may lead to significant financial challenges. However hard it is, you can overcome these obstacles through proper financial planning. This guide offers practical strategies you can use to navigate your financial duties after divorce.
- Understand your current financial reality
To begin with, take stock of all your assets and liabilities. Look into your savings accounts, stock portfolio, and real estate property. Next, jot down your debts. Consider your credit card balances, personal loans, and mortgages. Having a clear picture of your current financial standing helps you craft a tailored solution.
The next step is determining your new monthly income and expenses. There’s always a high likelihood of these changing after divorce. Your income may be higher or lower depending on whether you keep your job and the remaining income-generating projects you run. Your monthly bills, subscriptions, and recurrent expenses may be lower or higher, depending on the house you shift to and your lifestyle changes.
Armed with this information, try to find a balance. If your expenses exceed your income, cut on less essential things. For instance, you may opt out of video streaming subscriptions, gym memberships, online storage, or cell phone services. Only settle for the most essential expenses you can’t do without. It’s better to have a surplus and save it for a secure financial future.
- Address shared financial duties
Alimony and child support are some of the most common shared responsibilities post-divorce. Begin by understanding your obligations fully. Ensure you remit payments accurately and on time. Remember, failure to honor child support and alimony obligations may lead to fines and possible jail terms. And if you’re on the receiving end, ensure you get the agreed amounts without fail.
Consider how old the child is and calculate how many years you’ll have to support them financially. According to Colorado child support law, you’ll have to continue until the child turns 19.
If you had shared loans or joint credit card debts, it’d be best to seek appropriate refinancing options from your lender. Typically, you’ll get a portion of the debt to clear individually. This ensures no financial entanglement with your former spouse.
Finally, you must update your will to reflect your current relationship and wishes. Ignoring this bit may cause significant problems upon your demise.
- Budget for single life
Solo living is much different from living as a couple. So, don’t assume the budgets you were all used to will work in your new life.
Think deeply about how you’ll be spending money. Begin with the basics like rent, electricity, water, groceries, transport, and healthcare. These are non-negotiable, and you must prioritize them. They set a foundation for your financial plans. You can tell what is left after allocating money to these essentials.
Another thing to consider is emergencies. Life is full of surprises, including sickness, fire, natural disasters, job loss, and burglary. Such events come unannounced and can significantly throw you out of balance if you don’t have the funds to cushion you against the effects. So, set up an emergency fund of about three to six months’ worth of expenses. Be diligent in stashing away money. When tough times come, getting back on your feet will be easier.
Finally, you’d want to manage your discretionary spending. This includes non-essential expenses you can survive without, for instance, dining out, entertainment, and leisure travels. You may want to consider free or low-cost activities or entirely abandon some of these undertakings.
- Revisit your financial goals and plans

family problem, divorce and people concept – unhappy father, mother and sad little daughter at home
Divorce means your initially intended life trajectory has shifted. Thus, you need to re-strategize.
First and foremost, set new financial milestones. You might have envisioned building a retirement home by a certain age or saving enough for your kids’ college education by the time you hit 40. But since you’re now alone, it may take longer to achieve some of these goals. Moreover, you may drop some dreams altogether.
Another thing, think about retirement. Perhaps you had a joint retirement plan with your spouse. It’s now time to focus on individual saving. Consider increasing contributions to your retirement account. The more you save, the more comfortable your life will be later. Generally, aim to put aside enough money so you live on 80 to 85% of your current income upon retirement.
You’ll also need to revisit your insurance coverage. You may have been covered under your spouse’s plans. Now, it’s time to get individual policies mirroring your current marital status. These include life, health, and property insurance. If you already had some plans while married, update them with fresh details of next of kin, beneficiaries, and residential address. Outdated policies may cause you trouble when filing a claim.
Conclusion
Despite the emotional rollercoaster, you must compose yourself and plan your finances before you run into a mess. It may take months or years of strategizing before you regain total control of your financial situation. Be prepared to put in long-term efforts.
Hiring a financial planner or tax advisor is essential for expert guidance on regaining economic security after divorce. Their vast experience with such situations places them in a position to offer incredible advice.
With the right strategies, you can overcome the typical setbacks of divorce and thrive financially.