Divorces are costly in many aspects of life, especially financially. Starting over with your finances after a divorce can feel very overwhelming as you try to navigate through the changes. The legal bills themselves can be very costly as you go through the divorce process. And then, after the divorce you’re left trying to manage your expenses with less income than what you have been used to. It can be a lot to handle, but here are some tips to help you if you’re in or are going to be in this situation.
Know what you have and where you are at with your finances
Take some time to sit down and get a clear picture of where you are at on your own financially. Consider how much money you’re bringing in to live off of each month, what expenses you have, and what assets you have. It’s important to get really clear on the numbers. Make sure you don’t leave anything out.
When calculating your expenses, don’t forget to go through your bank statements. Total up how much you’ve been spending each month. Add up what you’ve been spending on groceries, subscriptions, gas, clothes, eating out and more. It’s important to get a clear idea as to how much you’re spending in all the necessities each month, as well as all the not so necessary items.
Create a budget
Now that you know where you stand financially after going through your finances closely, it’s time to create a budget. It’s most likely that you will have to dial in your spending a bit after your divorce. Be honest with yourself and make sure you can live equally or below your means financially. Can you really afford to continue living alone in the 2500 square foot house? Can you really afford to maintain driving your brand-new car? Is it necessary? Or is it a want?
Start with the absolute necessary expenses each month and work your way forward from there. Once you have the necessary expenses, move through your list of the wants. Then create allowances for yourself for shopping, eating out, and entertainment.
As you implement your budget, make sure you are tracking what’s going in and out of your bank account each month. Save bank statements and receipts. This will help you sit down at the end of each month, and adjust your budget as needed for the next month.
Rebuild your retirement
Talk with an advisor about how to best handle your retirement funds after a divorce. This can be a tricky area to navigate financially so it’s best to get some assistance. You’ll want to make sure you’re not going to be facing penalties, withdrawal fees and other unexpected expenses.
It’s always wise to set aside a small amount each month for an emergency fund. I recommend to have at least 3 months of income in savings for a rainy day.
Once you adjust to your new monthly living budget and lifestyle, don’t forget to keep working on investing monthly into your retirement fund. No matter your age this is very important.
When it comes to navigating and making it through a divorce financially, remember that millions of others have gone through this too, and they’ve survived. And you can too. It may be a very overwhelming and stressful process, but there is hope. And I’m here to help you as your Divorce Recovery Coach.
If you’d like a 45 minute complimentary consultation to set up a good plan for your finances, you can do so by clicking here. I’m not an accountant or financial planner but I have had to do this myself and can guide you on the basics.
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