On the Money: Surviving the Financial Devastation of Divorce

Practical Tips for Moving Forward.

Sponsored by Frost
By Jenny Hoff

Divorce is a life-altering event that can leave one feeling emotionally and financially drained. Navigating the financial aftermath of a divorce requires careful planning and resourcefulness, and knowing where to look for help and support. Financial hardship is also one of the main causes of divorce; so if the financial situation is already tenuous, divorce can exacerbate the problem. However, moving forward is key and there are some immediate steps you can take to start rebuilding your financial health while going through a divorce and in the aftermath. 

1. Gather and Organize Financial Documents

The first step in managing the financial impact of divorce is to gather and organize all relevant financial documents. This includes bank statements, tax returns, investment account statements and any other records that detail your financial situation. Having these documents in order will help you understand your financial standing and prepare for negotiations. If you own cryptocurrency, make sure you have the token’s information so it’s not something that gets lost in the process. This can be time-consuming, but organizing your financial information is crucial before, during and after a divorce.

2. Assess Marital Assets and Liabilities

Understanding the full scope of your marital assets and liabilities is crucial. This includes real estate, vehicles, retirement accounts and any debts. In Texas, which is a community property state, assets and liabilities acquired during the marriage are typically divided equally. Knowing what you own and owe will help you negotiate a fair settlement.

3. Consult a Certified Divorce Financial Analyst (CDFA)

A CDFA can provide valuable insights into the financial aspects of your divorce. They can help you understand the long-term implications of different settlement options and assist in creating a post-divorce financial plan. In Austin, there are firms that can offer specialized services to guide you through this process.

4. Close Joint Credit Card Accounts

Revenge spending is common when couples are splitting up. To minimize further debt and hits to your credit score, close any joint accounts as soon as you are legally able to do so. You may want to also monitor your credit reports and check your credit report to make sure the account is no longer on it. Additionally, remove any authorized users on other cards you may have. 

5. Create a Post-Divorce Budget

Developing a realistic budget is essential for managing your finances post-divorce. Start by listing your income sources and fixed expenses; such as housing, utilities and insurance. Then, account for variable expenses like groceries, transportation and entertainment. This budget will help you adjust to your new financial reality and ensure you live within your means.

6. Update Estate Plans and Insurance Policies

After a divorce it’s important to update your estate plans and insurance policies. This includes revising your will, changing beneficiaries on life insurance policies and updating any power of attorney documents. These changes will ensure that your assets are distributed according to your wishes and that your financial interests are protected.

7. Update Estate Plans and Insurance Policies

Austin offers several resources to support women going through a divorce. Organizations like the Austin Women’s Financial Group provide workshops and seminars on financial literacy and planning. Additionally, the Texas Women’s Foundation offers grants and programs to help women achieve economic security.

8. Build a Support Network

Emotional support is just as important as financial planning. Surround yourself with friends, family and support groups who can offer encouragement and advice. Consider joining local support groups or online communities where you can share experiences and gain insights from others who have been through similar situations.

9. Rebuild your Credit Score

If your credit score has taken a hit, work on rebuilding your score to make any future loans as painless as possible. This includes paying your bills on time, keeping open credit lines you’ve had the longest and lowering the percentage of available credit you use. 

10. Focus on Self-Care

Taking care of your emotional and physical well-being is crucial during this time. Engage in activities that bring you joy and relaxation–whether it’s yoga, reading or spending time outdoors. Maintaining a healthy lifestyle will help you stay resilient and focused as you navigate the financial challenges of divorce.

11. Plan for the Future

Finally, look ahead and set new financial goals for yourself. Whether it’s saving for retirement, investing in education or starting a new business, having clear goals will give you a sense of purpose and direction. Remember, divorce is not the end, it’s a new beginning. And with careful planning you can build a secure and fulfilling future.

Divorce is undoubtedly challenging, but with the right strategies and support you can overcome the financial devastation and emerge stronger. By taking proactive steps and utilizing the resources available you can navigate this transition with confidence and resilience.

More from the October Issue