How do you recover from divorce financially?


by Chris Torrone



As we recently discussed, divorce has a way of impacting us on several fronts, not only emotionally and relationally, but financially as well. Depending on how you define “recover” for yourself, it can take some individuals as many as 5 years to recover financially after their divorce. 

So many aspects of our financial plan, financial goals, and financial future are impacted during this season. Our credit score and credit card activity can take a hit, significantly affecting our overall credit history. Our emergency fund can get drained. Our expenses may remain just as high even if we’re bringing in less money. Our divorce agreement can dig into our retirement, affect our loan payments, force us to shell out alimony, impact our relationship with our banks, and alter our spending. We may have to give up property and borrow more from both our personal loans and our nest egg. In short, our financial lives and situations are often changed for a long time. 

The impact of divorce on our financial situation, retirement goals, and financial independence cannot be overstated. Gaining a strong financial footing in the wake of the often unfortunate financial aftermath of divorce is vital to the long-term health and well-being of you and your family. Financial recovery is possible and financial freedom, despite how difficult your divorce experience was and whether you received a strong divorce settlement, requires smart money management, patience, good advice, wise investing, and a clear plan. Let’s look now at a handful of important steps you can take to ensure your recovery.

Understand Your Income will Decrease, So Follow a Budget

You should simply expect this will happen. Your standard of living will change for a while, so you need to readjust to these changes quickly and with your eyes completely open. 

You’ll need to make a firm budget, watch it closely and stick with it, not simply for a short period of time, but for the long haul. It’s a good thing to still dream and plan for the bigger and better things. But you need to prioritize stability and rebuilding during this time. 

Figure out exactly what you need and begin doing away with superfluous expenditures and luxury items you really don’t need. Focus on basic monthly expenses like food, health insurance, education, rent or mortgage, auto loans, saving for retirement, and other primary needs. 

It’s tempting to treat yourself often during this time with personal gifts, expensive meals, and nights out. Of course, it’s okay once in a while. But these add up quickly and lead to greater financial damage and a longer recovery time. 

Living according to a budget may not sound sexy or exciting, but it is wise, and later on, you’ll be glad you remained disciplined during this time. 

person working hard to recover financially from divorce

Build an Emergency Fund along with Additional Savings Accounts

This is something we mentioned last week in regard to protecting yourself financially during divorce. However, it’s just as important after you finalize your settlement. One of the negative financial aspects of divorce is how your emergency funds and savings accounts get drained. 

Savings are easy to ignore and neglect when you don’t need them, but imperative and lifesaving when you do. If you didn’t create an emergency fund during the divorce process, start one today. Put money away with every paycheck in an account that you use only during emergencies. This ensures your family a greater level of protection and peace of mind. You never know what life will throw you. 

Also, create a savings account that isn’t an emergency fund, one established for future plans and other goals. We promise you will never regret having more savings. 

Pay Off Debt

Debt can weigh down our lives for decades if we’re not careful. If we let it grow too much or neglect to stay current on our loan payment history, our mortgage payments, and other credit accounts and financial responsibilities, we risk severe and lasting credit damage, collections, and the inability to obtain loans and additional lines of credit in the future. 

This can limit our family’s access to resources and opportunities. It can limit our children’s choices of education, affect our ability to leverage investment property, and even force us to give up assets to pay for our credit debt. 

Besides this, paying those debts down opens up funds for better things in life, new investments, travel, better homes, and the opportunity to help those in need. 

Consider New Training and Education

You may be wondering why this made the list, considering most forms of professional training costs us money. But when chosen wisely, a professional certification, more in-depth training within our current field, or even an entirely new area of study, can open a world of new doors to us in our careers. 

Divorce is a time of change and it doesn’t all have to be bad. It’s also a time to explore new possibilities for your life and work. By investing in education and training, you may give yourself experiences you hadn’t previously considered and give yourself a bump up in income while you’re at it. 

Get Creative with Financing

Do you still want to take your kids on vacation? Maybe you want to upgrade your business equipment or turn the garage into a studio for rental income. Even on a budget, you don’t necessarily have to put these goals on hold. 

Consider using accrued credit card points to pay for trips and stay with friends or family while you’re away. Sell unneeded items to finance new ones and go in with a partner to fund your rental unit. 

man working to recover financially following divorce

Consider a Professional

When making a new financial plan for your family and your future, you don’t have to go it alone. Certified financial planners, along with personal accountants, can be invaluable allies on your path. 

They have years of experience in these fields and often possess knowledge and ideas that don’t quickly come to mind for the layperson. They can help you create a budget that works for you, help you develop financial goals, guide you toward investments, show you where to get personal financial training, and offer ongoing advice you just can’t get anywhere else. 


In Closing

Financial recovery is a major concern following divorce. With so much riding on your financial well-being, it’s always the right move to start planning sooner and get the help you need. Things will be more difficult for a time, but it will get better as you continue to put smart money principles into practice. Don’t give into hopelessness. Reach out for the help you need, stick to your plan, and approach your finances with a long-term perspective. 

Torrone Law helps individuals and families find resolution and peace of mind during divorce, custody, and adoptions. Contact us today to learn more and find out how Torrone can help you protect what matters most. 

To learn more about financial recovery after divorce, check out our frequently asked questions and answers below. 


Who can I talk to for help with my finances during and after divorce?

A great place to begin is with a trusted, certified financial advisor. They’ll look at all your assets and debts, help you write a budget, set financial goals, and choose smart investments.

Other great allies include an experienced accountant and mentors who have shown years, even decades of wise money choices and financial management in their own life and business., 


Can I maintain the same lifestyle even after divorce?

Well, sometimes, if your settlement was sizable, and you have a great job. But the truth is, almost never. Most individuals need to rethink their plan for a while. You will usually have a decreased income and less access to additional assets. This means you need to write a budget and stay with it. 

Get rid of unneeded subscriptions and luxury services. Sell unneeded items, and scale back on the size or frequency of certain activities and purchases.


How can I protect myself financially even before the divorce is finalized?

If it looks like divorce is on the horizon, start an emergency fund right away. Set aside money each month (only from your own income, not from your spouse’s) that you can use later when times get tough. Stop buying unneeded items and be frugal with your spending. Do a survey of your finances to get an idea of what assets you control. Check out your retirement account and read a few books on personal finance and preparing for divorce from a financial perspective. 

The information contained in this post is provided for general information purposes only and does not constitute legal advice as every case is unique. The information provided herein is simply our way of introducing you to Torrone Law. We make no representations or warranty as to the quality, accuracy or completeness of any information, materials, or links to outside websites or materials provided through this website. For specific legal questions you should contact us for a free consultation.

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