Today we have a guest post from Bryan of Bucks & Cents. Bryan’s a financial manager and licensed real estate agent. He holds a BA and a Master of Public Administration. He enjoys helping others get their finances on track and create wealth-building strategies.

There’s no question that going through a divorce can play havoc on your life and your finances. 

It is without a doubt one of the most major life transformations a person can experience and go through. However, it doesn’t have to be a permanent death blow to a secure financial future.

There are steps you can take and a specific process you can explore that can make the transition less painful.

By implementing some of the steps below you can right your financial ship and get back on the path to financial independence.

1.  Self-Assess Expenses

I’ve gone through a divorce in my life. It was long and painful in many regards and cost a boatload of money. One of the most important things you can do once the ink from the judge’s signature dries on the court order is to conduct an assessment on your finances.

During the divorce process, a lot of negotiation occurs.  Most of the negotiations are done by the lawyers of each party known as the plaintiff and defendant.  The party who files for divorce is the plaintiff and the other party is the defendant.  

Now I’m not saying these lawyers sit on the phone and talk about their golf swings and bill you $300 an hour because let’s face it billable hours are a big part of it, but they deal with the debts and assets of your life.  

All of your debts and assets have to be negotiated from the date of marriage to the date of filing for divorce.  This includes things such as:

• Cars and homes
• Mortgages, car loans, personal loans, and credit cards

Everything financially incurred since the date of marriage between both parties is the topic lawyers for each party address.

After your divorce is finalized you have a completely different financial landscape in all areas of your life. These include things such as housing, transportation, debt payments, and maybe even student loans.

Prior to my divorce, I lived a Jones’s lifestyle which ultimately (probably) played a role in why I got divorced in the first place.  

With all the new financial obligations I had after my divorce, I knew I could no longer afford this lifestyle.  

2.  Eliminate What You Can’t Afford & Don’t Need

I knew in order to get my finances back on track I had to make drastic changes in my housing costs. Some of those things included not only my house but a lot of household items as well. 

Since I was moving into a place where appliances were included, I sold them for extra cash.  Not only did I get a bit of money in my pocket, but I also did not have to deal with the hassle of moving my appliances.

Additionally, I sold off all types of landscape equipment, outdoor patio sets, lawnmowers, and things I just did not need anymore.  

3.  Buy Only What You Need

After going through a divorce, your life will be in a “readjustment period.”  It’s important that after divorce while your life is in flux you only purchase items and spend money on essential things you need.

Housing is one of these essential items. Trying to keep your housing costs minimal while your life is in flux can be a great way to really help you move forward.  

It was clear that I no longer need a house with over 3000 ft.² for myself and two kids I have half the time. It’s expensive to heat, cool, and maintain a house that size.

I ended up buying a cooperative townhouse that’s roughly 10% of the cost and 66% less square footage than my previous home.  

There are strict rules with cooperatives, however.  Some of them do not allow mortgages. My cooperative has this restriction in place.  This basically means that a buyer must pay cash for the unit.

4.  Live Simple

You can make a lot of progress in rebuilding your financial life after divorce by simple living.

As I stated above, I ended up buying a townhouse which was a lot smaller than my former house. So, I found myself getting rid of a lot of things I or my kids no longer needed. 

I would recommend living a simple lifestyle at least temporarily right after your divorce is final for a lot of reasons.

By living a simple lifestyle in transition, you can use your free time available to really figure out what the future of your financial life entails.

This may include things such as going on more vacations, saving for retirement, or maybe starting a business. Those things would take money and resources to do.

Ultimately by living a simple lifestyle, you are allowing yourself time during your transition to figure out what you want to do with the rest of your life and what your goals and dreams are.  

Life does not end after divorce. It just starts down a different path. 

5.  Practice Budgeting

Once you have a little bit of direction on what your future entails in your life, you’re going to have to start budgeting your expenses. It’s important to budget your money for several reasons.

Budgeting offers a financial plan of how to pay for things in your future. I mentioned above that maybe you may want to vacation or start a business. 

By creating a budget, you are going to be able to work those things into your future financial plans.

Planning for your future is one of the most important things and also a foundational step of how to build your financial life after divorce.

6. Save Money

After you spend some time and go through the exercise of budgeting, you may realize you need to save more money to achieve financial goals in your life faster.

There are several things you can do to save more. The first ones being to practice minimalism and frugal living choices. 

The budget you develop should help you weed out things you no longer need. Frugal living can be thought of as DIY ways to save cash. 

Frugal living is often associated with specific actions or items you can take to save money. Examples of this would be buying generic peanut butter over name brands.  Or building a garden in your backyard to grow your own produce.

Another way to save money would be to practice living stingy in your lifestyle. 

Oftentimes, people associate living stingy as frugal living and yes there are similarities, but the two are marginally different.

As mentioned above, frugal living is taking specific steps to reduce the money spent on a certain aspect of your life.

Living stingy on the other hand is different.  While it’s related to frugal living, living stingy is more of a mindset lifestyle choice. It’s placing a value on things that are important in your life.

You can practice living a stingy lifestyle by taking frugal living steps to reduce costs in your daily life. Some examples of saving on food include:

• Patronizing restaurants and establishments offering ‘kids eat free’ meals. This can add up to a substantial amount of time and money saved.
• Planning out your meals for the week in advance and using digital coupons at the grocery store to save some cash.  
• Shop at discount stores like Aldi to save time and money

7.  Determine an Ideal Lifestyle

Once you’ve gone through the above steps such as examining your expenses, buying only what you need, and utilizing budgeting techniques, it’s time to analyze your future lifestyle and what that entails.   

You’ll want to ask yourself questions such as:

• Do I see myself living in my current housing situation for just a couple of months or years, or for the next 10 years of my life?
• Would I like to relocate out of the area?
• How much longer am I going to be working full-time?
• Do I need to save more money for retirement?
• Would I like to travel more in the future?

By asking yourself these types of questions you’re ultimately determining what kind of lifestyle you want to live presently and in the future.  

Once you’ve figured out how you’d like to live your new lifestyle, the next step is to take a deeper dive into your finances.

You need to determine if your income will match up to the lifestyle you want for yourself.   

If you’re struggling to fund your current lifestyle, you’ll need to either reduce your expenses further, increase your income, or a little bit of both. 

8.  Increase Income

When you’re unable to reduce your expenses any further, the only other option is to increase your income. 

There are so many ways nowadays with the Internet that you can make extra money in addition to your full-time job income.  

I learned how to start my blog while going through my divorce and it has been one of the best things I could have done for myself.  

Sharing opinions is another way to make money online. For example, you can earn money by being part of a focus group or even working part-time for Google itself as they employ many remote employees and have tons of remote positions.  

If you are looking to increase your income with the prospects of turning your hustle into a business, there are options for that as well.  

Consider things such as freelance writing or even becoming a landlord which will offer you a pathway to financial freedom. 

There are many avenues to increase your income that can be done in your spare time. And you could convert many into businesses.

Wrap Up

Divorce can certainly be a major change to your finances.  However, it can also force you to look at your life and the life you want to live differently as well. That’s not always a bad thing.  

Rebuilding your life and your finances can be complex and can take time.  It’s not done overnight.  However, by following some of the steps above, you CAN get your life and your finances on track.  

Right-sizing your finances to what your future life entails does take work and effort to achieve. But once your finances are back on track you can make your dreams a reality. 

Article by Bryan of Bucks & Cents. Bryan’s a financial manager and licensed real estate agent. He holds a BA and a Master of Public Administration. He’s currently working on wealth-building strategies that involve real estate investing and rentals. Bryan enjoys helping others get their own finances on track to improve their financial health.