#2017Throwback: 4 Tips for Rebuilding Your Finances After a Divorce


This is meant to be an inspiring piece for all who have gone through a divorce (or are going through one now) to know that things can (and will) get better. However, you have to be part of that solution...

While I have not been divorced, my husband has, and I have witnessed the emotional (not to mention financial) damages that are caused to all parties. In some cases, some individuals are impacted more than others, but ultimately divorce sucks for everyone involved. Well, except for their lawyers; I'm pretty sure they walk away with pockets of cash and grins on their faces. Ironically enough, divorces cost more than marriages, and with more than 1/3 of all marriages ending in divorce, the odds are stacked against many couples from the get go.

I have seen plenty of divorces go down over the years, but if I had to give my friends advice on how to repair financial damages after the fact, here are four pieces of advice that I hope they would find invaluable:

1) When It's All Over, Get Yourself a Financial Advisor ASAP

While dealing with your remaining funds following a mentally-draining ordeal like a divorce may be the farthest thing from your mind, you must act quickly to develop a plan to rebuild your savings. CFPs (Certified Financial Planners), especially the ones who are officially fiduciaries, know and understand the plights of divorced individuals and can help get everything back in order as soon as possible. You don't want to wait, because an advisor will help make sure that you don't miss any important deadlines when it comes to signing up for health and life insurance, changing the beneficiaries in your will, as well as how to go about filing your taxes and and deductions that may help you. Don't put off getting help with your finances.

2) Work on Rebuilding Your Credit

Following a divorce, you should immediately check your credit scores and the reason is to assess what (if any) damage has occurred to your credit. If you find that your scores have taken a big hit, it's important to make a plan to rebuild your credit by paying your bills on time and eliminating big chunks of credit card debt. Low credit scores will mean that you'll have a hard time getting new credit cards or loans and this can have a negative impact on personal savings going forward. Shared loans and credit cards with your ex-spouse are generally the reasons for credit scores taking a hit. Work to pay off credit cards in full each month or pay down your purchases as you go.

3) Build an Emergency Fund

Emergency funds are staples for everyone, and they are especially important for individuals who have gone through a divorce. Many people find that they may now have new expenses that they didn't expect, such as alimony payments, child support payments, rent for their own residence, money to pay their taxes, etc. It is recommended to have enough money saved to cover 6 months of living expenses, and now all of these new expenses must be accounted for in your emergency fund. If you're newly divorced, you might want to consider taking a second job to earn the money needed to build this fund -- and it's even better if it's doing something that you really love (i.e. being a ski ambassador, painting, giving music lessons, teaching part-time, etc.) This will not only help you financially, but emotionally too.

4) Be Careful of Any and All Investments You Make

With the money you have left (saved) it is important for a divorced person to always make sure those dollars are moving and gaining something. Most put their money into simple money market accounts, which gains a little interest, but putting extra funds into something smart like index ETFs, will ensure that your money gains similar amounts to that of the broader stock market. It also helps to reassess what your risk tolerance levels are now that you're on your own. For instance, a divorced person making child support payments may now have a lower risk tolerance going forward versus someone with little continuing obligations. Be smart about your investments; take a look at your current situation and never take on more risk than you (and your legal and financial obligations can handle).

... and for the heck of it 5) Breathe. It will all be okay.

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