Your finances post-divorce can significantly set you back. Emotionally, it can devastate your self-esteem and your belief of what your life can be like in the future. Regardless of the reasons for the split, the repercussions may linger for a long time after. If your divorce was particularly contentious, you might have a long road ahead for recovery. One thing you can take control of relatively quickly is your financial situation. After the property, debt, and assets get divided, you will have to begin getting yourself on a good financial path. Take a closer look at these five things you can do to improve your finances post-divorce and set yourself up for financial success in the future.
Tips on How to Improve Your Finances Post-Divorce
Create a Monthly Budget
During your marriage, perhaps your combined income did not require you to create a budget. Now that you are a one-income household, you should start getting into the habit. A budget is not meant to intimidate or shame, but rather help. It allows you to get a clear picture of how much money you make and where it needs to go. Start by listing all of your household bills. These include things such as:
- Mortgage or rent
- Property insurance
After you fill these in, move on to your monthly debt payments. These can include an auto loan, credit card, and student loan. The final step is to factor in groceries, household goods, and other monthly expenses. These may not be easy to figure out at first, but after a few months, you will get a better idea of how much these will cost.
Cash is King
Paying with credit is usually easy. It means you can get what you want without having to wait and save. To get back on your feet after a divorce, though, it is best to hold off on purchasing large items with credit. There are exceptions to this, of course, but as a general rule, use cash when possible. Saving away cash for a few months to purchase a couch may feel like it is taking forever, but it will save you money down the road.
Establish Your Solo Credit
There are times when using cash is not possible. When purchasing something large, like a car, you need to have credit. Getting a vehicle in your name alone may prove difficult after divorce since it is likely you do not have as high an individual credit score. Establishing your credit may make it necessary to open up new credit cards in only your name and using them. This is not a license to charge freely but rather an exercise in restraint. Get a card to charge your utilities to every month, but then pay it off at the end. It is true that the credit bureaus want to see you carry a balance on credit cards, but it does not have to be exorbitant.
Sell What You Don’t Need
You may have come out of the marriage with items that used to mean something but now take up space or elicit sour memories. Selling used goods is much easier than it used to be with online websites available to handle the transaction. Social media has outlets set up that allow neighborhoods to create buy-sell pages. If you are looking to sell more high-end items, such as jewelry, you may want to speak to a reputable jeweler in your area. A jeweler can give you an appraisal or a report on how much your pieces are worth. In some instances, they may make you an offer for them on the spot. Selling what you no longer want is an excellent way to build up some cash savings as well.
Earn Extra Money
What happens if your monthly bills outweigh your income? This may be a hard pill to swallow, but after divorce, it is not unusual to feel the pressure of too little cash. The most damaging avenue you can take is living off of credit. Instead, cut your budget where feasible. After doing this, if you still have a deficit, you may want to find a second job. Do not take on a second full-time job unless it works with your lifestyle. However, something you can do in the evenings or when your kids are away may give you the boost in your bank account you need. Even if you don’t have a large deficit, getting extra money from a side job is never bad.
Getting to a good place with your finances post-divorce may take time and patience. You may experience setbacks along the way, but you will get there if you keep plugging along. Give yourself some grace during the process. Remember, you are still healing from a life-altering event. You need to show yourself some brevity when trying to get back on your feet.