On top of the heavy emotional impact, divorce often forces significant financial changes. Separating assets and revising long-term plans can feel overwhelming, especially if you shared finances with your spouse for decades.
While there’s no one approach to financial planning after divorce, taking a few practical steps early on can help you regain stability. This guide offers tips to help you navigate the initial fallout and get back on your feet.
Tips for Financial Planning After Divorce
When you’ve had your money tied to a spouse for years, you can’t just flip a switch to disentangle your finances. Here are some of the most important steps you should take to get a clean start—and make the most of it.
Get a Clear Financial Picture
Many people wonder, “Are assets always split 50/50 in a divorce?” The answer is no. However, even if your assets aren’t divided down the middle, divorce can drastically change your overall financial situation.
If you’re unsure how to sort out finances when separating, taking a thorough accounting of your new financial situation is a good place to start:
- Make a list of your assets and their values
- List your debts and other liabilities
- Write down your monthly income and expenses to get an idea of your cash flow
Whether you dealt with financial trouble in marriage or not, this is a vital step to take. When you can see your finances in black and white, it becomes much easier to build a budget and financial plan for your life as a single person.
Open Individual Accounts
One of the most critical steps you can take to protect yourself in a divorce is to close your joint bank accounts and open separate ones. This is essential for keeping your funds distinct and preventing potential disputes down the line.
Retitle Your Assets
If you received a home, vehicle, or any other previously joint assets in the divorce, retitling them in your name is another important step in avoiding conflict. Note that in general, you’ll need a copy of your divorce decree to move the process forward.
While this is something you can do yourself, it can be beneficial to have the help of a divorce lawyer and financial planner. For instance, if you have a mortgage and you need to remove your ex’s name from the deed, you may have to refinance.
In this situation, these experts could help you decide whether refinancing is worthwhile or whether it makes more sense to sell the home.
Change Your Beneficiaries
If you have a retirement account, life insurance policy, or another financial account with your ex-spouse as the beneficiary, update that designation as soon as possible. If you don’t, they could get your money if something happens to you.
Many people remember to update their wills but forget to change the beneficiary designations on individual accounts themselves. Don’t make this mistake. In many cases, the beneficiary designation takes precedence over what’s written in your will.
Create a New Budget
After a divorce, your income, expenses, and financial priorities often change significantly. Creating a new budget helps you adjust to those shifts and redefine where your money needs to go under the new circumstances.
For a simple starting point, the 50/30/20 budget is a commonly used framework:
- 50% of your income goes to needs (rent/mortgage, minimum debt payments, insurance, groceries, etc.)
- 30% goes to wants (hobbies, dining out, shopping, etc.)
- 20% goes to savings and extra debt payments
Don’t put too much pressure on yourself to get your new budget dialed in right away. Reviewing it regularly and adjusting as your situation changes is far more important than sticking to rigid percentages.
Set New Financial Goals
When you were married, you and your spouse probably had joint financial goals. Maybe you wanted to save a certain amount of money for retirement or purchase an investment property.
Now that you’re single, you’ll need to set new objectives. Here are a few possible examples you might add to your post-divorce financial plan:
- Building an emergency fund of six months’ worth of expenses
- Paying down any high-interest debt left in your name
- Contributing a certain amount to your retirement fund
Setting SMART (Specific, Measurable, Attainable, Relevant, Time-Bound) goals is essential. When you use this framework, you convert vague financial aspirations into actionable plans for success.
Post-Divorce Financial Planning Is Intimidating, but It’s Within Your Reach
Financial planning after divorce can be emotionally and logistically difficult. However, it’s an important part of rebuilding your life and moving forward. Be patient with yourself during this process, and remember that you’re working toward a brighter financial future.
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