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December 2, 2022

Money After Divorce: 6 Steps to Take to Thrive Financially

Mother and son together

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Managing money after divorce can be incredibly overwhelming at first. Not only are you dealing with the emotional fallout from your marriage ending, but now you have financial responsibilities you are shouldering on your own.

The divorce process can be long. It often involves hiring a divorce lawyer and coming to a divorce settlement, all while trying to navigate a new phase of life. Your new phase of life might involve living on your own or alone with your kids for the first time in a long time.

You'll likely have to make hard decisions and assess your marital assets, retirement assets, health insurance, and joint accounts. You do this while managing legal fees, which can be a financial burden. In fact, the average divorce costs $12,900.

Still, there is hope. Your divorce does not have to define you. In fact, you can use this time to design a new life. You can develop your own financial goals. You can work hard to ensure you have enough money to do things you've always wanted to do.

Consider this time a complete reset. Yes, your divorce is final, but it's not the end of your life. You now have the opportunity to make positive lifestyle changes when it comes to your mental health, your physical health, and your financial health.

Here are a few steps to take to get there.

How to Manage Money After Divorce

Step 1: Get Organized and Know What You Have

The very first step when you sit down to manage your money after a divorce is to get organized. During your divorce, you likely had to put all your financial cards on the table. This means you had to look at how much money was in your bank accounts, how much money you had in retirement accounts, and how much debt you had.

In the aftermath of the divorce, your finances likely look very different. You'll likely separate property from your ex-spouse. You might have to take on mortgage payments on your own or refinance your home. There is personal property you likely have to split up, like cars, and retirement plans to reconsider.

Your post-divorce income might look very different than your income beforehand. Hopefully, your divorce agreement resulted in an equitable distribution of property. But, whether it did or it didn't, now that your divorce is finalized, it's time to accept where you are and move forward from there.

questions to help with organization:

  • How much cash do you have on hand?
  • Do you have an emergency fund? If not, how much do you want to have in one?
  • How many loans do you have in your name?
  • Are there loans you need to refinance in your name only?
  • Are you receiving spousal benefits, alimony, or child support?
  • Do you have a legal document showing your divorce agreement?
  • Do you know which payments auto-draft out of which checking accounts? Is there anything you need to change about your accounts because you no longer have joint ownership of them?
  • Do you need certain types of insurance that you didn't have before, like life insurance?
  • Do you need to make an appointment to update your will or create a trust?

As you can see, getting organized will take time. However, in order to understand all your assets and make sure they are fully protected, this is a necessary step. So, take your time gathering this information and making any financial considerations.

Keep in mind this process might be emotional. Sometimes, even looking at account statements or considering retirement planning alone can bring forth feelings of loss or sadness. Embrace the journey, feel the feelings that come up, and keep moving forward.

Step 2: Pull your credit report and understand your credit score

Hopefully, divorcing couples are respectful of each other after the divorce is complete. In a perfect world, your ex-spouse won't do anything to negatively impact your credit. Additionally, hopefully, they follow through with everything listed in your divorce decree, including refinancing loans in their name, transferring money where applicable, etc.

But, every divorce case is different. And for that reason, it's always wise to monitor your credit report and your credit score. Follow these steps.

  • Go to and pull your free report from the three main credit bureaus.
  • Look through your entire report and check for errors.
  • Pay special attention to a category called adverse credit. This is where you'll see any accounts in collections, along with phone numbers.
  • Call to rectify any account in collections and set up a payment plan if possible.
  • If anything is incorrect on the report, you can request the credit bureaus remove it. This includes if you're still listed as an authorized user on credit cards belonging to your former spouse.

Step 3: Create a New Budget

Photo by Andrea Piacquadio

Now that you've taken steps to get organized, pulled your credit report, and know what you're responsible for moving forward, it's time to create a new budget.

Some people might be experienced budgeters at this point, while others will be new to budgeting. Either way, your finances are going to look different from how they looked prior to your divorce. You might have more or fewer expenses depending on what responsibilities you and your ex agree to take on after the divorce.

You might have less income to work with because you won't be putting two incomes on your budget spreadsheet. However, you might have supplementary income in the form of child support, alimony received, or other assets you have ownership of.

List out all forms of your income and then list out your payments, including minimum debt payments. Take a hard look at your expenses, your average spending, and all the payments you're responsible for.

Think about what expenses you want to keep as you manage this transition in your life and what you can cut. For example, there might be subscriptions you can cancel or other extras you can cut back on until you get to a point where you're able to re-establish yourself. 

Practice tracking your expenses each day and try to stay within the budget you've given yourself for each expense category. I like to use Personal Capital. It's free to link your accounts, create a budget, and find out your net worth.

Step 4: Know Your New Net Worth

One of the most empowering things I did after my divorce was creating a net worth spreadsheet as a single person. Your net worth is your assets (home, car, investments, cash, etc.) minus your liabilities (mortgage, student loan payments, credit card debt, etc.)

It's a useful exercise to find out your net worth because it gives you a big picture of your finances. Your budget, on the other hand, is focused on your day-to-day spending.

I was in the habit of creating my net worth spreadsheet every single month when I was married. It was a time for me to look at our joint finances as a whole and see how we were doing financially. This was a time when I allowed myself to dream big, set goals for us as a couple and a family and projected where I thought we would be in the future.  So, after I was divorced, I decided to create a brand new spreadsheet just for me. 

It's still emotional because now our family is split into two households, and doing a net worth spreadsheet is a stark reminder of that. Now, instead of joint goals, I'm thinking about my own personal goals and retirement plans. Still, it's worthwhile to do and something I'd recommend to divorced people.

Step 5: Grow Your Income

The quickest way to improve any financial situation is to grow your income. After all, there are only so many expenses you can cut. And, if you have assets that are now yours on your own, like a family home, you likely have increased expenses you're responsible for.

You might have to pay property taxes, create a new retirement plan, pay alimony, pay your own medical expenses, send child support payments, and pay back your divorce cost. You might want to increase the amount in your investment accounts, fix past financial mistakes, buy more property, and increase your retirement assets.

To do all that, it's likely you'll need more financial support in the form of a higher income. In my own life, I've leaned into work, adding on more clients and working more hours with the goal of getting my finances back on track. Perhaps there are ways that you, too, can increase your income with a side job until you get to a better place financially.

Step 6: Find Your Community

Photo by Helena Lopes

Divorce comes with a lot of shame. It can be hard for a divorcing couple to reach out to others for help. I know for me, my divorce felt like a massive failure. Telling my family and loved ones that my marriage was over and divorce was on the horizon was one of the hardest things I've ever had to do.

The truth is, people are more supportive than you realize. It's very important for you and your ex-spouse to reach out for help. When it comes to your finances, perhaps you talk to a trusted friend or financial professional. One spouse might find solace in taking up a new hobby, while the other might spend more time with friends and family.

As a way to cope, I created an online club for all moms who feel like they need a village called the Mom's Got Money Club. In it, we support each other through the journey of motherhood. It's for anyone identifying as a mother – not just single moms, and I'm enjoying finally having a group of friends I can rely on for accountability.

Money After a Divorce: Finding the Silver Lining

The truth is, you can look at your divorce in two ways. You can look at it as the end of your life as you knew it or you can choose to see it as the beginning of your life 2.0. Although there is heartache, financial stress, and emotional baggage to sort through during the divorce process, there are also so many silver linings.

Learning how to manage your money is a great skill to develop for this version of your life. Remember, there is hope after divorce, and there are many resources you can utilize to learn about money, become debt free, and create a beautiful life on your terms.

Are you working on managing money after divorce? Which of these steps are you focusing on right now?

Please let us know in the comments below.

Cat Collins

Cat Collins is a nationally recognized financial educator and the author of the book Mom’s Got Money: A millennial mom’s guide to managing money like a boss. Over the years, her writing and expertise have been featured in dozens of media outlets including Good Morning America, Yahoo Finance, Forbes, U.S. News and World Report, Real Simple, The Huffington Post, Kiplinger, Investopedia, Business Insider, and many more. She currently lives just outside of Detroit, Michigan with her boy/girl twins and two rescue dog named Julep.

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