How to Recover Financially After a Divorce

Divorce isn’t easy for anyone – in any way. But financially, it tends to be especially hard on women.

After divorce, women experience an average of 45% decrease in their standard of living whereas men experience about a 20% decrease.

When you’re in the process of going through divorce, you may feel too overwhelmed to even think about your financial situation. Plus, with attorney fees and division of property, your financial situation is thrown into a state of uncertainty. But after everything is finalized, it’s crucial to make a plan for your finances as soon as you can.

While I have personally not experience divorce, we have many members in our program, the Million Dollar Year, who have and these are the steps that we recommend they take before, during, or after divorce to help gain control over their finances.

If you want to learn how to recover financially after a divorce, keep reading!

1) Calculate your net wealth

The first thing you need to do is get a snapshot of your current financial situation. I know that this may seem scary, but it’s important.

Your financial situation probably looks very different; your income may be different, you may have lost retirement savings, you may be bearing the full brunt of paying down debt, you’ve probably paid thousands in lawyer fees...

It’s important to understand exactly where your finances stand post-divorce.

You can do this very easily using a free online net worth calculator.

2) Set financial goals

Now that you know what your current financial situation looks like, it’s time to think about what you want your life to look like 5, 10, 15 years from now. Do you have debt you want to pay off? Do you want to be retired?

Your goals may look different now that your partner is out of the picture, so it’s important to think through what you want for yourself

3) Create a weekly money ritual

A lot of the women we work with passed the job of managing money to their partners. If that’s you, don’t be embarrassed; not only is it extremely common but most of us were raised with the expectation that the man will be the one handling the finances.

But the problem is, we see a lot of women who have never had to manage money themselves until after they’re divorced and if you don’t learn this skill quickly you can accidentally do things that are bad for your financial health and find yourself in financial stress and trouble fast.

Whether you’re used to it or not, you need to make a habit of managing your finances — what we call a weekly money ritual.

Pick a specific time and place every week when you will review your weekly income and expenses. And make sure to incorporate ways to make your weekly money ritual pleasurable, like lighting candles or playing music or treating yourself to a spicy margarita afterward.

If you want some ideas on what to do during your weekly money ritual, download our free money ritual checklist!

4) Adjust your budget

Chances are, the amount of money coming into your bank account every month looks different after a divorce. That means you also need to rethink the amount of money leaving your account every month.

I recommend sticking to the 50/30/20 budget, which is a simplified and sustainable approach to budgeting.

Essentially, 50% of your monthly income goes towards your needs, 30% goes to wants, and you should save at least 20%.

5) Establish an emergency fund

An emergency fund acts as a safety net in the case of an unexpected emergency, like your car gets a flat or the AC breaks down

If you don’t have an emergency fund saved up, then just work on saving $1,000 for your emergency fund. Eventually you’ll want to reach the point where you have enough money set aside to cover 3-6 months of basic expenses.

6) Start paying down debt

Post-divorce, you may be solely responsible for paying down debt that accumulated during your marriage. Or you may have built up debt during the divorce process. Regardless, you’ll want to make paying off debt a priority.

We have a full article on how to pay down debt, but to sum it up, you’ll want to prioritize high-interest rate debt, meaning debt with an interest rate above 7%, like credit card debt.

7) Prioritize your retirement savings

It’s important to make sure your divorce didn’t affect your ability to retire – and if it did, you want to get back on track as quickly as possible.

We wrote a full article on how to start saving for retirement if you’re 40+, but here are the bullet points:

• Start saving dramatically
• After you’ve paid off high-interest debt and built up an emergency fund, max out your retirement contributions
• Invest your savings

8) Look for ways to increase your income

Depending on your situation, this may not be necessary. But if you’re struggling to make ends meet or want to make a larger income to maintain your standard of living or just want to save more, then you’ll want to think about ways to increase your income

If you already have a job, this doesn’t (necessarily) mean that you need to take on another one…but have you received a raise lately? Maybe it’s time to have that conversation with your boss. (And if you’re not sure how to handle that conversation, check this out!)

If you aren’t currently earning income - start!

I’ve seen too many women who were shell shocked after the painful proceedings of divorce who took too long to start earning independent income and found themselves in tens of thousands of dollars of credit card debt as a result.

Don’t let yourself live off of debt - find income, even if it requires temporarily taking a job that is below your paygrade or skillset. It is worth it to keep yourself out of a debt hole.

9) Revisit estate planning

You may want to revisit your will, rethink your beneficiaries, and properly document the passing of your assets.

10) Don’t be afraid to ask for help

This is a really difficult time. But you don’t have to go it alone. Don’t be afraid to ask for the help you need, whether that’s emotional support from a friend or getting clarity on your goals by hiring a financial coach.

How Sharon paid off $72,000 after her divorce

Divorce is a big change. And it may be hard in a lot of ways. But it doesn’t need to be financially disastrous. You can still build a financially secure future. You don’t need to feel stressed, anxious, or overwhelmed by managing your money.

And if you want to learn more about how to build wealth from what seems like a hopeless situation, you should watch our free masterclass on building wealth as a first-time investor. In it, I explain how I went from $40,000 in debt to making thousands from my investments every month. We also explain the system that thousands of women+ have used to build wealth that they never imagined was possible.

Like Sharon, who had $72,000 in credit card debt after her divorce, but is now debt-free for the first time in 20 years and is confident she’ll be able to retire.

Hope to see you there!

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