Struggling Financially After Divorce? A Few Tips to Follow

(Credit: pixabay) Struggling Financially After Divorce? A Few Tips to Follow
July 16
10:24 AM 2020

If you have recently gone through a divorce, one thing at the forefront of your mind is probably money, or more precisely, the lack thereof. You are not an anomaly though. This is a reality that is faced by most newly divorced people.

Financial struggles are real, for both men and women

There is a common misconception that only men struggle financially after a divorce. The reason for this perspective is the way in which assets are usually divided and the financial obligations are usually levied on men, in the form of alimony and child support. However, women don't have it easy either. On average, women experience a 27% deterioration in their quality of life, post-divorce.

How can you better manage your finances post-divorce?

If you are among the many who are worried sick over the uncertainty of their financial future after divorce, the tips below will help you navigate your post-divorce financial situation in a more responsible manner.

1. Anticipate a decline in your post-divorce financial situation

Prepare yourself for a deterioration in monthly income, once the divorce gets finalized. Actively try to save money in anticipation that you will need it in the coming months. You should also prepare yourself mentally for the change in your standard of living, post-divorce. The following steps will help you stick within your means during this delicate time:

  • Develop and stick to a budget

Work out a budget based on the projected monthly income that you expect to have post-divorce. Differentiate between your needs and your wants, prioritizing the formal over the latter.

  • Take any and all sources of income into account

While deciding on a budget, take note of all forms of income, including investments, alimony, and child support. However, keep in mind that these support mechanisms will eventually end, so plan accordingly.

  • Make a list of essential/unavoidable expenses

Take a look at your credit card or checkbook to get an idea about your primary expenses up to this point. This will help you narrow down the most crucial expenses to spend your limited income on after the divorce. Also, incorporate quarterly/semi-yearly/annual expenses into your budget, such as insurance premiums and tax liabilities.

  • Get help from a trusted family member or friend

If you are inexperienced in creating and managing a budget, then you can ask for help from a trusted friend or family member. They can review your budget and make suggestions about what expenses to alleviate or even remove as something you can do without.

  • Sort out necessary options first

Take note of your health insurance, car insurance, and other critical expenses to ensure that they are in order, even without the financial support of your spouse.

2. Manage your housing situation, keeping your eyes open

When it comes to the marital home, particularly in an area where real estate is booming, you may want to keep it. It can seem emotionally comforting, given the substantial changes that occur during a divorce, to know that you won't have to change where you live. However, there are a few important things that you must consider:

  • Can you afford maintenance on your own?

Though it may seem like a good option to keep the home, keep in mind that a house is a non-liquid asset, which implies that you won't be able to pay your bills with it. Also, quite often married couples invest in houses that neither spouse can maintain on their own. Mortgage payments, taxes, insurance, utility bills, and unexpected repairs can add up quickly. Make sure that by keeping the house, you aren't getting in way over your head.

  • Are you able to buy out your partner's share and how? 

If you are sure that you can afford to maintain the house, you will have to figure out an arrangement in order to not just qualify for the mortgage on your own, but also buy your ex-spouse out of their share. If you have worked out an agreement that allows you to keep the home, it is important to get everything worked out before your former partner's name comes off the mortgage deed.

  • What can you do?

If you didn't get the home, the prudent thing to do would be to opt for a separate, more affordable housing situation. You can either rent or buy, depending upon your income. You can also consider shared ownership properties to alleviate the pressure of maintenance costs.

  • Don't give up on real-estate

Even if you are cash-strapped at the moment and cannot afford a down payment on a new place, with some discipline and determination, you can save some money and try and secure a separate house in a year or so. To save money a little faster, consider parking your savings into safe and low-risk investments.

3. Focus on improving your credit score

Even though it does not matter to a credit card company whether you are married or not, it does matter to them that you pay your bills on time. While dealing with the financial challenges thrown at you because of the divorce, it can be hard to manage and improve one's independent credit score. The following steps will help you figure out the puzzle:

  • Open an independent bank account

After years of transacting through a joint account with your spouse, the very first thing you ought to do now is create and start maintaining your own independent bank account. This will allow you to easily transfer your resources and accumulate them in one place under your name. Build credit history by using the account to make payments and even open a credit card to use for minimal purchases, then pay off the debt at the next billing cycle.

  • Disassociate yourself from any financial association with your spouse

Close down all shared accounts or transform them into independent accounts. Financial decisions made by your partner can impact your credibility, for good or for bad, if you continue to associate your finances with theirs. Thus, you should not only end all associations but also contact credit reference agencies and let them know that you no longer want your spouse's financial activities to have any impact on your credit report.

  • Don't lose heart

If your credit score took a beating during the process of divorce, don't be dismayed. It is never too late to start working on and enhancing your financial reputation. Follow the above tips and start upgrading your credit score.

4. Be aware of the tax ramifications

There are several key tax implications that accompany a divorce. You must acquire knowledge and understanding of those implications in order to better manage your future finances. Some  pivotal things to be aware of include:

  • The spouse who is earning more may end up being disqualified from certain family-related tax credits. Usually, single people pay more in taxes, particularly those who happen to fall into higher-earning brackets.

  • Child support cannot be used as a tax deduction.

  • Spousal support does count as a deduction, as long as the spouse that is receiving the spousal support acknowledges it as income. Child support is not considered income for the spouse who is receiving it. That is the reason why child support does not qualify under deductibles.

  • You will have to update your tax status according to your post-divorce financial scenario. So thoroughly check the situation of your taxes to understand what changes you may encounter as a result of your updated status. In some cases, you may be entitled to a different set of benefits.

5. Do everything in your power to make the divorce is as inexpensive as possible

This is probably the most important tip of all to avoid financial ruin. Lots of couples blow their entire life-savings paying for the divorce. But it doesn't have to be that way. In today's society, there are plenty of opportunities to lower the cost of divorce and even get out of it with minimum costs. Just follow these steps:

  • Deal with your emotions so they don't get the best of you.

  • With a cool head, get on the same page with your spouse and negotiate the terms of the divorce.

  • Strive for an uncontested divorce, so that you don't have to hire a lawyer or pay hefty legal fees.

  • File for a divorce online, wrapping up the process in a cost-effective manner.

The money you save by having an amicable divorce without a lawyer can be used to build a better future for yourself.


By following the steps above, you will be able to mitigate your post-divorce financial troubles with relative ease and less anxiety. The main thing is having a game plan you can use while embarking on your fresh new journey of life. Guided by your financial mission, you will be able to find the means to stand on your own two feet. Gaining control over your finances will help you gain control over your future.

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