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How To Pick Up the Financial Pieces After a Divorce

Budgeting Financial Planning for Unique Situations Goals

To say divorce is overwhelming would be an understatement. Whether you saw it coming from a mile away or were completely taken by surprise, it can be mentally, emotionally, physically and financially draining.

In the midst of divorce, there are many issues that may need your focus, such as:

  • Splitting assets
  • Divvying up debts
  • Deciding on custody, if applicable
  • Determining any ongoing support

Of course, there’s much more.

But what about all of the issues that come after the divorce is finalized? Like most people, you probably have a laundry list of questions like:

If you’re asking yourself questions like these, you’re not alone. Here are 8 things you can do to help rebuild your life and pick up the financial pieces after a divorce.


1. Evaluate Your New Financial Situation

Even if you had a good handle on your finances pre-divorce, it can be difficult to know where you stand once the dust settles. That’s why it’s important to evaluate your current financial picture so you can see where you are right now and plan for where you want to go.

You can evaluate your financial situation in two ways: By creating a budget and setting financial goals. Let’s break down both of these parts.


Align Wealth Partners has helped many clients pick up the pieces after a divorce. If you have financial concerns, contact us to see how we can help.


2. Create a New Budget

Use these 4 steps to create a budget that works for you:

  • Step 1: List out all your debts and assets (such as your house, investment accounts, retirement accounts, credit card debt, student loans and so on).
  • Step 2: List out your total monthly income (such as your salary, child or spousal support, rental property income, investments, etc.).
  • Step 3: Add up all your expenses (such as mandatory fixed expenses, mandatory irregular expenses and discretionary spending).
  • Step 4: Subtract your expenses from your total monthly income.

What do the numbers tell you? If your budget is tight, look for ways to loosen it up. Maybe you want to pay off some of your debt, but you don’t have the extra money in your current budget to do so. Or maybe you want to save more for your children’s college fund, so you need to free up some extra cash.

If you need help spotting excess fat in your budget, ask yourself these 3 questions:

  1. Is there any discretionary spending I can cut down on? (Think unnecessary subscriptions, dining out, shopping sprees, etc.)
  2. Is there a way I could increase my income? (Think side hustles, freelance work or raises at your current job)
  3. Did I receive any money through divorce settlements that could be used to pay off high-interest debt?

3. Set New Financial Goals

Divorce is an opportunity to create a brand-new life for yourself. The financial goals you had when you were married will likely change when you’re single.

So take a moment and dream big. Think about where you want to be 5, 15 and 20 years from now. Create concrete financial goals and then map out a detailed plan to get you there.

Note: You may be on your own, but you don’t have to go through this alone. Connect with a trusted financial advisor who can help you assess your current financial situation and craft a detailed plan to reach financial freedom.

4. Review Tax Ramifications

A lot of people don’t think about the tax ramifications of divorce until after the fact. But if some of your assets are liquidated in the divorce, for example, you may have to pay taxes on them that year. If assets are simply divided, on the other hand, you may not owe taxes right away.

From changing your filing status to handling child support, there are a lot of moving pieces when it comes to divorce. And unless you’re a tax professional, it can be hard to know what does and doesn’t have tax ramifications. Consulting a financial advisor or tax advisor can give you confidence and help ensure that you don’t end up with a surprise tax bill at the end of the year.

5. Purchase Insurance Policies

Based on which assets you received in the divorce, you may need to purchase new insurance policies. Some common insurance policies to purchase or adjust include:

  • Car insurance
  • Home insurance
  • Health insurance
  • Life insurance
  • Disability insurance

If you have children, you and your ex-spouse may also need to decide whose health insurance policy the children will be on.

6. Update Legal Information

Most of the time, updating beneficiaries gets thrown to the wayside as you deal with “more important” financial matters after a divorce. But many times, a married couple will list their spouse as a beneficiary, and after a divorce, he or she may be the last person you want to receive your accounts if you should pass away. As soon as you have time, update your legal information by:

  • Naming new beneficiaries
  • Electing new powers of attorney
  • Appointing a new contact on medical directives

You may also need to create a new estate plan and update your will, which also involves naming a new successor trustee. If this sounds overwhelming, a financial advisor can help you with these tasks. Don’t hesitate to seek help if needed.

7. Be Easy On Yourself

This next tip isn’t a financial one, but it’s still worth mentioning. Divorce is uncharted territory for most people. Decisions you once made as a team are now solely up to you. Your routine may be thrown off; everything may be different and the future may even seem bleak. Trust the process as you adjust to your new normal, and be easy on yourself if it takes you a while to find your new groove. In time, you will adapt to your new routine.  

8. Get Help From a Trusted Professional

As you adjust to your new life, you’ll probably have a never-ending list of financial questions. In these moments, it’s important to have a trusted financial advisor who can help you pick up the financial pieces, put your puzzle back together and find financial clarity. (Think of a financial advisor as your own personal coach who you can go to for guidance and motivation.)

At Align Wealth Partners, we can help you gain financial confidence after a divorce. Whether you need help creating a new financial roadmap, adjusting your investment strategy or learning basic money management skills, we’re here for you. To learn more about how we can help you plan your financial future, contact us today.