Knowing what to do with your money after a divorce can be challenging and scary. You’re essentially rebuilding your life which can feel overwhelming. Here, we outline some first steps to navigate the process and come out the other end feeling like a boss.
Get an overview of your expenses
Taking stock of your expenses so you can get a clear overview of your current financial situation is the crucial first step in managing your money after a divorce. Chances are your expenses have gone up while your total assets have been divided between you and your ex-partner, leaving you with less money than you had when you were married.
Start by creating a spreadsheet with all your monthly expenses. This should include rent/mortgage, car repayments, school or childcare fees, utilities, food and so on. Anything you can think of, write it down. By understanding your expenses you’ll be able to create a roadmap of your cost of living over the short, medium and long term.
Work out how much you have
Now that you’ve outlined the outgoings in the short, medium and long term, it’s time to assess where you’re at right now. Divorce can have an enormous impact on your personal finances. The bottom line: do you have enough money to support yourself?
Go back to your expenses spreadsheet and start adding your capital. This should include any support payments, income, super and so on. Subtract your expenses from your capital and you’ll have an instant snapshot of where you’re at – either in the red or the black.
Redefine your priorities
It’s only early days, so expect feelings of uncertainty and fear to creep up on you. If your calculations have shown that you’re going to run out of money, it’s time to redefine your priorities. You need to put a firm plan in place so you can have financial security moving forward.
This process will look different for everyone. The point is to look for areas in your life where you can make some serious changes to your bottom line. Can you move to a cheaper home? Or even move in with family for a while? Can you take public transport instead of buying a car? Or, is it time to get a new job, ask for a pay rise or start that side hustle you’ve been thinking about? Get creative with this process and really tap into what lights you up and what doesn’t. You might be surprised by the results.
Plan ahead
How you plan for your financial future will vary greatly depending on your age and life stage. But no matter where you are, planning ahead is crucial for avoiding financial stress and anxiety.
If time is on your side, put a plan in place to make small contributions over a long period of time. There’s no time like the present to start preparing for a better tomorrow. Your future self will thank you for it.
Be the boss
If you’ve always managed your own finances then chances are budgeting and keeping on top of your bills is second nature. For those of you who left the finances to their ex, it might be something completely foreign and challenging for you.
First up, know that there is plenty of help and advice available to you if you need it. A financial planner can eliminate problems down the track, as well as empower you to take back control of your life. No matter whether you go it alone or with the help of a financial planner, it’s time to be the boss of your money and your future!
Rebecca is passionate about promoting the positive impact of quality financial advice on personal wellbeing. Read her full bio here.
