Divorce feels like waking up in an alternate reality: your daily routines, personal identity, and financial future are all suddenly different. Even when you know you made the right decision—even when you’re glad you got out—that loss of security can leave you anxious and overwhelmed.
You might find yourself wondering:
- How will I afford to retire without my spouse’s income?
- Can I still fund this lifestyle?
- Are my savings, assets, and investments even safe?
These worries are natural, but here’s the good news:
Your finances are one of the most “solvable” parts of divorce.
The transition may be painful, but careful planning can help you regain control faster than many people realize.
This article will help you kick-start that process and share what we’ve learned supporting people through the financial transition for over 20 years. Let’s start with the truth: divorce can reshape your financial life in ways people often don’t expect.
What to Expect: The Emotional and Financial Challenges Ahead
Divorce has an immediate negative impact on most individuals’ finances:
- Administrative Costs: Simply obtaining a divorce involves a financial hit, with a 2019 Martindale-Nolo Research study finding that the average individual spends $12,900 throughout the process.
- Lost Income: Unless you have total financial independence, divorce is likely to impact your income. Research from the U.S. Government Accountability Office found that women face particularly steep losses, seeing their household income drop by 41% year following a divorce.
- Higher Living Costs: Many basic living costs are likely to increase after divorce. Paying rent or a mortgage on a home for a single individual is usually most expensive; the same is often true for single-payer insurance, health plans, and other essential costs. Studies show that men see a 21% decline in their standard of living, while women see a 45% drop after divorce.
Put simply, your short-term financial outlook likely looks pessimistic. This can lead to a “crisis of confidence”, especially for women who were less involved in their household finances pre-divorce. Studies find that just 36% of these women feel confident managing their money after divorce, with 39% reporting it took them more than one year to regain that confidence.
That lack of confidence often leads to fear around:
- Whether you can trust your ex-spouse during divorce proceedings
- How the financial settlement will impact your children
- What impact will the coming months and years have on your overall net worth
But the solution is to face these concerns head-on. Nearly half of women encounter financial surprises during divorce proceedings, from unexpectedly high interest rates to hidden expenses. Simply getting organized and taking proactive steps to understand your situation can help neutralize these shocks—and give you a head-start on rebuilding your financial life.
What does that mean in practice?
Your First Priority: Separating Your Financial Identity
Even if your divorce is smooth and amicable, unresolved administrative or legal paperwork can leave you vulnerable. Your ex-spouse must not be able to access your personal finances; your debt, credit, and liquid assets must be exclusively in your name.
That break is important financially, but it’s also a significant psychological step. Establishing yourself as an independent entity can help reclaim your identity—and forces you to confront your new reality.
Prioritize the following five actions:
- Close all joint accounts: Every joint bank account and credit card represents a potential liability. Your ex-spouse could make unauthorized transactions, leaving you responsible. Close them all. Open new individual accounts in your name only.
- Update every beneficiary designation: This step is critical because beneficiary designations typically override whatever your will says. Go through your IRAs, 401(k)s, life insurance policies, and annuities. Update each one.
- Change all passwords and PINs: Digital accounts, bank access, credit cards; everything needs new credentials. Consider creating a new email address that’s entirely yours. If you’re concerned about privacy, set up a new mailing address through a PO box or mail forwarding service.
- Retitle your assets: If you were awarded the house, the car, or other titled property, the paperwork needs to reflect sole ownership. Contact the relevant authorities and get the deeds and titles updated.
- Check your credit independently: Order credit reports from all three major bureaus—Equifax, Experian, and TransUnion. Look for unknown debts or accounts you didn’t authorize. Consider filing a “notice of disassociation” to formally separate your credit file from your ex-spouse’s.
Once these steps are complete, you are ready to start planning for your post-divorce life.
Financial Planning After Divorce: A Step-by-Step Guide
Our advisors recommend a few simple steps to rebuild your financial plan after a divorce:
1. Set New Long-Term Goals
Your financial future has been built around a shared income and identity. Divorce frees you to rethink what you want from the coming decades—and how your finances will support those goals.
Marriage might have limited your options; perhaps your ex-spouse hated travelling or had specific goals of their own. Without those restrictions or compromises, the possibilities for your future have expanded. The only “limit” is your willingness to name and go after the future you want.
Over half of all women make a significant career change after divorce, often changing careers or even starting a business. Others realize hidden passions or visions for their retirement.
None of this has to be you. You might want all the same things—and you should absolutely pursue your personal ideal. But at least take the time to really consider your options and set your goals intentionally.
2. Evaluate Your Financial Situation
The first step to reaching your goals is an honest appraisal of your finances. How much are you worth today—and what do you need to make your vision for the future a reality?
There are three factors to consider here:
Calculate Your Net Worth
Follow these three steps to calculate your net worth:
- List everything you own (your house, car, savings, retirement accounts, investments)
- List everything you owe (mortgage, car loans, credit card debt, student loans).
- Subtract the second number from the first.
The result is your net worth; it’s really that simple. This will influence factors like access to credit, investable assets, and retirement planning.
Establish Your True Income
Now you need to understand exactly how much you have “coming in” individually. This might appear simple; surely it’s just your salary, right?
While many divorcees have a clear-cut post-settlement income, make sure you don’t overlook:
- Dividends from investments
- Projected asset and investment gains
- Child support payments
These may influence how much money you have access to—and therefore your “true” post-divorce financial situation.
Identify Your Outgoings
The final step is to calculate your outgoings. While you can use household bills and bank statements to gain a relatively clear picture of your monthly costs, it’s important to consider:
- Changes to fixed expenses, such as housing, debt repayments, utilities, and insurance plans
- Adjustments to your lifestyle living expenses, such as food, travel, childcare, and entertainment
Some divorcees may benefit from reviewing their outgoings each month to identify novel payments, unexpected changes in costs, and hidden expenses. The transition to post-divorce life doesn’t happen all at once, and some outgoings may fluctuate as your life regains a more reliable structure.
3. Build a Post-Divorce Budget
Financial clarity gives you the power to reimagine your life. Building a budget allows you to adjust costs, rethink consumer decisions, and find opportunities to save, invest, or spend more than you might otherwise have realized.
Keep your long-term goals in mind: how could your new budget help achieve them faster or with greater confidence?
For many people, this is both empowering and nerve-wracking. Even if the numbers look right—you’ve accounted for complex insurance costs and that new yoga studio’s ridiculous membership fees—there’s still a niggling fear you’ve missed something.
That’s why divorce is one of the most common reasons people seek out financial advice. While an advisor cannot make divorce less painful, they can help you regain confidence and build a plan for the future that feels more stable.
Our experience suggests that even a single consultation may help provide greater clarity around financial decisions. You’ll gain perspective from a financial professional familiar with divorce planning considerations and can offer honest advice about what may serve your best interests.
At Marshall Financial Group, our initial consultations often explore questions like:
- Which financial steps are most important for you to take right now?
- How are your post-divorce finances likely to differ from your pre-divorce situation?
- What can you do to prepare for a smooth transition—and make post-divorce life work for you?
If these questions have been on your mind, you can book a complimentary call with one of our advisors at your convenience. Just let us know which area of your finances concerns you the most, and we’ll pair you with an advisor whose experience matches your needs.
__
Disclosure: This material is provided for informational and educational purposes only and should not be construed as investment, legal, or tax advice. Divorce planning involves complex financial and legal considerations, and individuals should consult appropriate professionals regarding their specific situation. Any examples are hypothetical and for illustrative purposes only. Actual outcomes will vary. Investing involves risk, including the potential loss of principal. Any statistics or third-party research referenced are believed to be reliable but are not guaranteed as to accuracy or completeness.
