Let’s not sugarcoat it – going through a divorce is TOUGH.
It’s messy, painful, and downright traumatic.
And just when you start to see the light at the end of the tunnel – you realize you now have to untangle years of FINANCIAL baggage left behind from the marriage.
Talk about overwhelming.
Bills, debts, assets, budgets…
And you might not have looked at any of them in YEARS thanks to your ex-spouse handling everything.
So, where do you even start to pick up the financial pieces and get your money right after divorce?
We at Purposeful Wealth Advisors worked with clients just like you following a split to help them press that “reset” button on their finances. And what we’ve realized is that you MUST approach your post-divorce finances with the same strategy as you did your separation…
One step at a time.
Follow this roadmap we’ve put together for you to slowly but surely build up your financial strength again following a divorce – on YOUR terms.
Let’s dive in.
Prioritizing Financial Obligations
Know Your TRUE Financial Obligations…and Your Ex’s
During divorce negotiations, you have LOTS of numbers, assets, and obligations flying every which way. It’s tough to keep track of
- What’s YOUR responsibility
- What’s your EX’s
- And what might still be shared
So, job #1 = gain 100% clarity around what debts and financial commitments YOU need to prioritize first.
For most people, this means:
- Ongoing child support payments (if applicable)
- Your share of marital debts now in your name
- Monthly housing costs
- Vehicle/transportation costs
- Basic living expenses (food, utilities, etc.)
Get very clear on the amounts owed and when payments are due. Having this baseline understanding will make plotting out the rest of your post-divorce financial roadmap much simpler.
And DO NOT wait until the last minute to pay! Set payment reminders, pay ahead of deadlines, and chip away aggressively.
Which brings us to shared commitments with your ex…
If assets or debts are still jointly owned post-divorce, you both must contribute agreed-upon amounts consistently and on time. Put pride aside – now isn’t the time for games or petty arguments.
Stay the course together until you eventually divide up and go your separate ways.
Effective Budgeting Techniques
Budgeting 101 to Take Control of Your Spending
Remember what it was like when you first moved out on your own? Exhilarating yet TERRIFYING trying to balance your own expenses alone?
Post-divorce money management brings up a lot of those same emotions.
The good news? You’ve matured A LOT since your early 20s. You know how to budget to align expenses with income…
But having expert guidance couldn’t hurt.
Let us equip you with a few advanced budgeting strategies:
Bucket Your Expenses
Break monthly spending down into three buckets –
- Needs
- Responsibilities
- And Lifestyle Spending
Focus on funding NEEDS first until you’ve paid down debts and built savings back up. Responsibilities and Lifestyle spending come next as money allows.
Use Expense Tracking Tools
Different apps give you automation and reporting to effortlessly see exactly where your money is going monthly. Taking manual work out frees up mental bandwidth.
Calendar Your Bills
Use an online calendar to map out due dates for all recurring payments. Set payment reminders so you never miss or make a late payment.
Getting back sound budgeting habits will accelerate your financial rebound post-divorce. Keep at it!
Boosting Income Streams
Extra Income? Now Might Be the Time
You might find yourself needing more income than your job, spousal and child support are providing.
With some strategic planning, you can leverage current assets to generate significant, consistent cash flow over the next year to alleviate financial pressures and maximize wealth.
Second home rentals, commercial space leasing, tax lien investing, private lending programs, equipment leasing.
There are also options to take distributions from investment accounts on a tax-favored basis to supplement your income.
Smart Saving and Investment Choices
Investing 101: Overcome Fear & Earn SMART Returns
Do you avoid investing altogether because well…the stock market is risky and complicated, and you could lose everything and more doomsaying?
Let us make this easy for you:
Over long periods, historical returns in the market consistently OUTPERFORM savings in certificates of deposit (CDs) and high-yield savings accounts. So, by keeping money OUT of the market, your money loses value to inflation over the same period.
And by missing out on returns? You’re costing yourself hundreds of thousands of dollars over your lifetime.
We get it. Investing IS complicated. There is a dizzying amount of options. If you put money in the wrong places or try beating the market? You could lose big.
But with just a few simple, common-sense guidelines, you can earn very healthy returns in the market without unreasonable risk.
Work with a certified divorce financial analyst to build the optimal portfolio given your age, risk tolerance, etc., and manage along the way.
See? Not so scary. Over time, those investments will snowball into SERIOUS wealth for your future self.
Protecting Assets and Future Earnings
Protect What’s Yours! Asset & Income Protection Basics
Maybe you received the house, retirement accounts, or other shared assets in your divorce settlement. First, congratulations! Don’t downplay those wins.
But now you need to take steps to PROTECT your newfound assets and income streams from future loss or legal attack, especially from a bitter ex-spouse looking for revenge.
Two big areas to shore up:
Retirement Accounts
For 401Ks, IRAs, and more – update all account info and beneficiaries pronto. The last thing you want is for your ex to still be listed on accounts eligible to receive funds if you pass away unexpectedly.
The House
If you kept the marital home, opt to refinance right away under your name. This removes your ex-spouse from the hook for mortgage payments if you miss or default.
Also, explore title insurance through a quitclaim deed to protect against potential ownership claims in the future. It sounds extreme but provides serious peace of mind.
Learning from Past Financial Mistakes
Don’t Allow Your Money Mistakes to Follow You
Many look back at ended marriages riddled with regret around “Could haves” and “Should haves”…
I could have paid off this credit card debt quickly. I should have started saving 10 years ago. If only I had invested back when…
Let the past stay there. Seriously!
Post-divorce is your chance to set NEW financial goals and priorities without past barriers holding you back.
Do you still carry the guilt about past money mistakes? Consider them harsh money lessons meant to guide better habits today.
Forgive mistakes – commit to new financial integrity moving forward.
Turn Those Lemon Divorce Memories into Lemonade
And just like that – we’ve covered the major steps critical for rebooting your personal finances post-divorce!
We know this roadmap provides tremendous value, but executing these financial strategies requires tailored professional support.
As an industry-leading wealth management firm catering specifically to high-net-worth individuals facing divorce, we invite you to schedule a consultation with our financial experts.
At Purposeful Wealth Advisors, we’ll listen to your unique situation, provide sound advice shaped by decades of experience, and craft a 360-degree plan to protect your assets while unlocking new income potential ahead.
The journey forward may not always run smoothly, but with our support in finances – that’s one less thing you have to worry about. We’re here to help you regain control. Talk to us today!
Opinions expressed are those of the author and are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
