Divorce changes pretty much everything. Whether it’s a surprise or something you’re both on board with, you’ve gone from a “we” to a “me" — and that can take some getting used to.
Maybe you were involved in the family finances while you were married, or maybe not. Either way, now the checkbook is in your hands. And that checkbook may look different than you expected.
Why? Frustratingly, research shows that women’s household income falls almost twice as much as men’s post-split. And divorce can affect women’s money in a lot of other ways, too.
That’s a lot. And dealing with it is also pretty urgent. Financial instability is stressful and disruptive (especially if you’re in a pretty emotional place right now). But hey, you got this — with a little help from a post-divorce financial checklist we made you.
Update your will and other legal paperwork
Very quickly after your divorce, you’re going to want to get that ex out of your legal paperwork. In fact, the American Bar Association recommends rewriting your will entirely after your divorce. It’s also good to update the beneficiaries on your retirement accounts, life insurance, and any other accounts like that ASAP. You might even be able to do it online through your providers’ websites.
Look at your insurance policies
After a divorce, valuables — jewelry, art, and even your house itself — might change hands. So it’s worth calling your homeowner’s insurance company to make sure your policy accurately reflects the assets you’ve kept. You’ll probably also want to be removed from your ex’s auto insurance policy, if that applies to you.
Then there’s life insurance. The amount of coverage you need is probably different, because your policy may no longer have to provide as much for your ex if something happens to you. (Or your divorce agreement might require you to have a certain amount for them.) Chat with an insurance agent to figure out how much insurance you should be paying for.
Check your credit
Your credit score can take a hit if bill payments get lost in the havoc of the divorce process, or if you carry a higher balance to get you through the financial uncertainty. Plus, if you’d been listed as an authorized user on your ex’s credit accounts, removing yourself could hurt your score (or help, depending on the age of those accounts and whether they’re in good standing). So reviewing your credit report is a good move — just to know where things stand. The federal government requires each of the three credit bureaus to provide you with one free credit report every 12 months.
If your score isn’t where you want it, or if you and your ex had joint accounts for a long time, you might have to work on building credit under your own name. And if you’re thinking about trying for a new mortgage or car loan post-divorce, it might be better to apply sooner rather than later.
Give yourself a financial checkup
Silver lining, perhaps: Going through a divorce has a way of forcing you to get up to date on your financial situation. Assets and loans and accounts are analyzed and split, and you’ll have to update accounts or open new ones. This is a ton all at once — but there’s a lot of value in knowing where you stand.
That’s only half of the financial checkup. The other half is to re-figure out how much you have coming in, and how that’s going to get divided up between bills, fun, and Future You. (We like the 50/30/20 rule as a guideline on that).
Another note on budget planning, if you were awarded alimony or child support: Your ex may be legally required to make those payments, but in reality, you might not always get them. It might be a good idea to plan your spending based on your income alone, if you can. That may mean you’ll want to plan how you’ll negotiate a raise. If you’re re-entering the workforce, take a look at resources like Après or iRelaunch, which give guidance to women coming back from a career break.
Pump up that emergency fund
The more uncertainty in your financial situation, the more an emergency fund becomes your financial BFF. We typically recommend saving three to six months’ worth of take-home pay for those rainy days, depending on how stable your money situation is. Going from two incomes to one — or relying on alimony or child support — is, unfortunately, a step toward the less-stable side.
So if you don’t have an emergency fund yet, see what you can put aside to build one up. If you have an emergency fund and need it now (because you’re moving out of the ex’s place, or because you’re replacing a shared car, or because everything they owned is in a box to the left), go for it! That’s what it’s there for — just plan to build it back up once you’re in a more stable place. And if you do have some money set aside for emergencies that you don’t need right now, maybe top that account off a little bit, if that seems right for you.
Revise your retirement plan
There’s the day-to-day of managing your finances, and then there are your future goals. Retiring is likely a big one — and get this: Women retire with two-thirds as much money as men, even though we live an average of six to eight years longer.
Of course, divorce has a nasty habit of throwing a wrench into retirement planning for women who had included their partners’ retirement accounts in their own future plans. Plus, you might end up having to give part of your retirement accounts to your ex (or getting some of theirs). So it might be worth checking your plan to make sure you’re still on track (and making adjustments if you aren’t).
Also, FYI: If you and your ex were married for 10 years or longer, you aren’t remarried, your ex’s Social Security benefit is higher than yours, and you’re 62 or older, then you may be eligible for a spousal Social Security benefit.
Don’t lose track of your other goals
What else? Maybe you want to buy a home in a few years — because you had to move after the divorce; because you want to be closer to your kids (or grandkids); because you’re on your own and can finally buy the house of your dreams with zero compromises; because whatever.
No matter what your goals are, once things settle down a bit, it’s never too late to start investing toward them. Rank them according to priority and then make a plan to hit them. Now’s the time to book a free 15-minute call with a financial planner that’s personalized to your unique circumstances.
You said goodbye to the ring and your ex — that’s enough goodbyes for now. It’s time to look forward to the future you want.