If you’ve divorced your partner due to irreconcilable differences or excessive alcohol abuse, you are certainly not alone. According to a study that was published in the Journal of Family Issues, 19.2% of couples reported divorcing over incompatibility whereas 10.6% attributed their divorce to substance abuse.
Regardless of the reasons for ending your marriage, divorce will undoubtedly take a toll on your finances. Fortunately, it’s possible to recover financially after a divorce. The following suggestions can help you get back on your feet once the ink on the divorce papers has dried.
1. Eliminate Unnecessary Expenses
Divorce means that you will now only have one source of income going into your home, so you will need to reduce your expenses. For instance, you don’t need both home internet and satellite, do you? You can also take your cell phone off the family plan.
2. Redo Your Budget
Take an honest look at your own income and measure it against your expenses. Figure out how much money you’ll have left after bills are paid, and adjust your spending habits accordingly.
3. Estimate Your Net Worth
The value of your estate and associated taxes will change after a divorce. Any estates valued over 10,860,000 for married couples and 5,430,000 for individuals are subject to estate taxes. Don’t let yourself be unprepared for the next tax season!
4. Create an Emergency Fund
Since you can no longer turn to your partner when money gets tight, you need to prepare for the unexpected. This means that you need to open a savings account for emergencies. It’s recommended to keep enough in savings to cover three to six months of household expenses.
5. Rebuild Your Credit Score
If most of your accounts were jointly held or in your partner’s name, you will need to establish credit independently. You can do this by paying off your debts and applying for a secured or low-interest credit card.
6. Pay Off Outstanding Debts
Regardless of whether you still owe student loans or incurred debt during the course of your marriage, you need to come up with a repayment plan. You can either start with the smaller debts or tackle the high-interest debts first. Just get it paid off
7. Set Goals for Yourself
As a new divorcee, you can now think of your own goals and priorities rather than your partners. Think of what you want your life to be like in the next five to ten years, and start taking steps towards reaching that goal.
8. Save for Retirement
Retirement is inevitable, so it’s best to start planning for it early, regardless of how young you still are. If you already have a retirement account, check on its status, and make the necessary adjustments to reach your retirement goals.
9. Find Additional Sources of Income
It isn’t easy to downgrade your lifestyle after a divorce, so find some ways to make extra money. It could be through a roommate, picking up a part-time job, or selling crafts online. Be creative, have fun, and put extra money in your pocket.
10. Invest in Health Insurance
You may need to update your insurance plan after a divorce, so you should select a plan that meets your needs. Approximately, 44% of Americans wish they took better care of their teeth. Invest in a health insurance plan that includes dental coverage, and show off those pearly whites.
Divorce can take a toll on your finances, but it’s possible for you to become independent and self-sufficient. You finally have the freedom to make your own financial decisions, so make the most out of being newly single by investing in yourself.