Divorce can wreak havoc on your finances if you are not careful. Despite the statistics, you can minimize financial loss with careful planning.
The precautions you take now can help you maintain control over your finances so you can rebuild your wealth as quickly as possible.
Rework your budget
Budgeting will be your best friend during a divorce. Recognize that given the split, your standard of living will change, and you might not be able to maintain everything you typically do. Make a note of where your income is and how you can effectively cover your financial obligations. Determine which debts you will maintain responsibility for and if needed, renegotiate a payment plan with lenders. Remove your spouse as an authorized user on your credit cards and open a personal bank account.
Reduce your spending
Prioritize your needs and cut back on your spending where possible. Fringe expenses like cosmetic treatments, food delivery services, car detailing and subscriptions are not a priority right now. You may need to live a conservative lifestyle for some time while you rebuild. Cutting back your spending will help you stay on top of critical financial responsibilities and give you a little extra to save.
Immediately after your divorce, saving money might look minuscule. However, consistent contributions over time will add up. Eventually, you can look for investment opportunities or options that will enable you to build compound interest. U.S. News suggests that one financial benefit of divorce is the chance to reset your finances completely.
You are in control of your finances. You can determine the trajectory of your future. Divorce does not have to be the reason you fall behind.