
Top five money management tips for divorced women
Have you found yourself asking “how am I going to rebuild my finances after this divorce.”? If so you are not alone. When you are married you have the luxury of having a partner to help fund your lifestyle. But once you are single all these responsibilities fall squarely on your shoulders. This can feel overwhelming at times, but it is not insurmountable.
The surprisingly good news about rebuilding after divorce is that you get to create the life that you want. You don’t have to negotiate about what color to paint the dining room, how much you spend on your nails, or taking that art class. With that in mind here are the top three money management tips for divorced women that have worked well for my clients.
Set Financial goals
According to a recent study people who set goals were more likely to achieve them. Setting financial goals for yourself based on your values is the foundation of a solid budget. It is also the best first step in rebuilding your finances after divorce. While thinking about the way you want to structure your life consider the types of things that are important to you. Before you sit down to create your budget ask yourself the following questions:
- What do I want my financial life to look like?
- What is important to me?
- How much do I want to give to charity?
- What do I want my children to value?
If you value travel, donating to charity, extracurricular activities for your children, or living in a certain neighborhood, these things get to be planned for.
One of the main reasons that I have seen people’s budgets fail is because they do not have a strong enough why tied to their spending and savings plans. It is much easier to avoid impulse purchases when you know that you are saving for a girl’s trip to the Bahamas. Or if you are saving for a down payment on a home in your dream neighborhood it is much easier to save an extra few hundred dollars from each paycheck.
Enroll your children
Get your children involved in this goal-setting process. They have gone through an equally traumatic change and taking the time to sit down with them to create a plan for their lives is not only a great bonding experience, but it gives them a sense of ownership of their lives.
Setting goals doesn’t require a ton of fancy tools but it is something that does require structure and accountability. If you aren’t used to setting goals and following the Fund Your Dreams workbook may be the thing you need to keep you on track.
Create a budget for your new lifestyle
Going from two incomes to one, or having to go back to work post-divorce, can be quite the shock. During your marriage, you may have gotten used to a certain level of spending that is no longer an option. However, with your goals clearly defined you can create a spending plan that is aligned with your values.
The best way to do this is to grab a sheet of paper or this free budget checklist. List of all your monthly and annual expenses. Make sure to add things like prescriptions, school supplies, membership fees, etc. On another sheet list all sources of income such as post-tax/deduction salary, side hustles, alimony, and child support.
Budget = Income – Expenses
Add up all of your expenses and then add your income. Then subtract your expenses from your income. If there is money left then consider putting that money into emergency savings, college funds, or your sinking funds. If there is a shortfall, look for ways that you can reduce expenses or add additional income.
Plan for fun
While building your budget don’t forget to plan for fun. Refer to your goals workbook from step one. What do you enjoy doing for fun and how can you add it to your budget? I encourage you to plan for at least one trip per year for yourself and one trip with your children. These trips don’t have to be expensive, but they should be added to your budget. A family weekend at a hotel with a pool can be great for bonding and creating memories. A trip to bed and breakfast alone or with a friend can be a wonderful way for you to recharge and reconnect to the new woman you are becoming.
Day trips to state parks, nature preserves, local library events, and free activities in your community are free or low cost and are available year-round. These things can fit any budget with some planning and forethought and should not be overlooked
Build personal credit
One of the first things that typically take a hit after divorce can be your credit score. You may have your own individual debts like personal loans, credit cards, or student loans which are pretty straightforward. It is unraveling joint credit cards, personal loans, mortgages, investments, and additional real estate can be a nightmare. This can be especially true if you had joint accounts that have been closed or mortgages that have been refinanced. This is the part of rebuilding your finances after divorce that is the most challenging.
The first step is to look at the debts that you listed in step two and prioritize the repayment order. Make sure that any joint debts that your ex is court-ordered to pay are paid. Keep a close eye on those debts. It is not uncommon for people to suddenly stop paying due to job loss or out of spite. Have a contingency plan in place in the event that you must take over those payments.
Research a debt repayment strategy like the debt snowball method or the debt avalanche method. Then choose a plan that you are comfortable with and stick with it. Depending on the size of your debts it can take some time to pay things off, but you can do it.
Create a celebration plan as you hit new debt repayment milestones. For each debt, you pay off do something fun for yourself. I have had clients who have done things like get a massage, back a celebratory pie, or take a vacation. No matter how large or small your celebration, make it a priority.
Your Future is Bright
You’ve made it! You are a woman with a new lease on life and an opportunity to be the best version of yourself. Divorce is not something to be excited about but it can be viewed as a rebirth. Forging a new path is overwhelming but if you are intentional about your goals you can rebuild your finances after divorce.
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