If life was a fairy tale, every marriage would last ‘until death’. Couples would spend their lives sharing not only love but co-depending on all matters including finances. Unfortunately, the reality is sometimes not kind and some marriages end up in divorce.
This new phase leaves some spouses unscathed while others are left with massive debts, new financial responsibilities, or a lack of enough know-how on how to manage personal finances. Finding your way back to financial freedom is not easy; it takes time and dedication. To put you on the right path, here are five tips for recovering financially after divorce.
#1 Start by Dealing with Your Emotions
Divorce comes with grief and anger from the lost love, emotional support, shared dreams, and so on. This has a draining effect on your quality of life and spiraling into depression is a common occurrence.
If the depression goes unchecked, you risk falling into irrational behavior like going off-budget leading to more financial ruin; to avert this, seek counseling. This could be from a therapist, joining a support group, or even opening up to a trusted family member or a religious leader.
#2 Create a Plan
Now that your assets have been split, you have to take care of all financial obligations that come with your share. List every asset and debt to know exactly what you are dealing with. This will help you in coming up with a detailed expenditure plan that addresses your income against debt repayments and future goals.
Identifying your financial limits will also come in handy in ensuring that your expectations are realistic and achievable. Create a formal plan, complete with an investment program that takes current income into account and one that is tailored to help you meet your set goals.
#3 Check your Credit
During the marriage, your credit score may not have mattered, especially if your spouse was the sole breadwinner and paying off bills never concerned you. Being alone means your creditworthiness will now come into play; you have to know your credit score which will greatly affect this.
A low score may result in adjustments on mortgage payments, difficulty in getting a job, or even an apartment. Immediately after the divorce is finalized or better still during the proceedings, check and start improving your credit score.
#4 Increase your Savings and Income
Divorce may call for cutting back on your expenses or a complete lifestyle downgrade. That said, being divorced should not mean being miserable. If you are unemployed, start looking for a job to supplement your alimony check. You can also look for a second job, if you already have one, to increase your current earnings.
A successful financial rebound is pegged on the size of your savings. With meager savings, you may be forced to over-rely on credit cards and personal loans to maintain your lifestyle. This can be avoided by adopting a savings plan; stow away as much money as your income allows, this will shelter you during emergencies or unexpected expenditures.
#5 Seek Expert Advice
Securing your finances is not an easy task even for the rich or staunch savers. This is where the services of financial advisors come in: They guide you in completely separating your finances from those of your ex and making sustainable plans for the future.
You will receive expert advice on how to; close joint accounts, transfer house and other asset deeds to your name, update beneficiary information on your will and insurance, balance your accounts, prioritize savings, file taxes, and how to go about any other money-related task that your ex used to handle.
Bottom Line Divorce is stressful, but the pitfalls can be reduced by adopting ways to keep your finances healthy. These five steps will not change your financial situation overnight but are a good place to start. In a nutshell, you should start by accepting your situation and dealing with the emotional turmoil. Once your mind is in the right place, come up with a plan on how to increase savings and income, and improve your credit score. Lastly, don’t shy away from engaging an expert to help you in making divorce settlement less complicated and guiding you through your financial projections.