Why Antivirus Software is Vital to Online Security One of the most common reasons for failures or problems in...
Money Management after Divorce
When you get divorced, your entire life changes–including your finances. You may go from two incomes to a single income, and still have to support many of the same things you needed prior to the divorce. If you’re struggling to figure out how you’re going to handle your finances post-divorce, there are several things to keep in mind.
Understanding Your New Finances
Step One: Look at Your Income
If you were the primary breadwinner prior to the divorce, your actual income may not have changed much. On the other hand, if both you and your spouse worked, your income may have taken a hard hit as a result of the divorce. Take a look at how much money you actually bring in each month. If you have variable income—combat pay that appears on your check when you’re deployed, for example—you’ll want to start at your lowest monthly level of income and go from there.
Step Two: Check Your Hard Expenses
Hard expenses are the ones that you can’t control each month. Post-divorce, this may include child support or alimony, which you can face serious consequences for failing to pay. You should also carefully account for the following:
- Rent or home payments, if you’re still making them
- Other payments that you can’t modify or cancel because you’re still locked into a contract
Step Three: Create a Budget
Now that you know what income you have coming in and what hard expenses you have each month, you can create a realistic budget. Subtract your hard bills from the amount you’re bringing home every month. That’s the amount that you have to work with for food, entertainment, and other spending money. Include important expenses like food in your budget first, then work to create a realistic spending plan.
Managing Money Post-Divorce
Once you’ve got a handle on your budget, the following tips will help you improve your odds of successful money management on your own.
Put Off Major Purchases
Now isn’t the time to make major financial decisions, whether you’re thinking about buying a car or deciding to dive in with a new investment. Take some time after the divorce to discover what your finances are going to look like and get a better picture of what you can actually afford. Put off major purchases if at all possible: the retail therapy high won’t last as long as you’d hoped anyway.
Expect Unexpected Expenses
It’s not just paying your lawyer that will add up fast after your divorce; you may face unexpected expenses, such as replacing items that your spouse kept in the divorce, moving expenses, and more. Try to keep funds on hand to handle those expenses during the first few months.
Clear Up Joint Expenses
Do you have a credit card together? A line of credit in both your names? Now is the time to close out any of those potential expenses and ensure that you no longer have joint expenses. This will prevent your spouse from running up debt in your name that can potentially destroy your credit score or make things harder for you down the road.
Learning to manage your finances after divorce can be a challenge. If you aren’t sure how you’re doing or how to manage it, let us help! Make an appointment for a free financial checkup to receive more guidance on your specific situation and learn more about how to handle your finances as you navigate your new life.
Federally insured by NCUA. Membership eligibility required.
Information appearing in this article is obtained from sources we believe are reliable. The information may not be a complete statement of all available data and is not guaranteed as such. Marine FCU is not responsible for the contents of this article and advises its membership to investigate claims before following the information provided.