How To Survive A Divorce Financially

Navigating a divorce is rough, particularly from a financial perspective. Concerns about emerging on the other side with your financial future and retirement plans intact are all too common.

This guide is designed to help you weather the storm. I’ll walk you through the process step by step, highlighting the key allies you’ll want in your corner, the objectives you should achieve together as a team, and actionable steps you can take to regain control of your financial situation.

Step #1) Put Together A Powerful Team

Financial planning to survive a divorce presents a challenge that’s packed to the brim with resistance, volatile emotions, and difficult decisions. I’ve been through this process with many clients, and I cannot stress enough how important it is to put the right people behind you. Here’s a list of those who can help make all the difference:

Friends and Family: Your personal support network is invaluable. Friends and family offer emotional support, practical advice, and can even provide a temporary financial safety net if needed. They’re your emotional anchor, helping you stay grounded and reminding you of your strength and resilience during tough times.

Mental Health Professional: Certain problems may extend beyond the capacity of your friends and family. Thankfully, a mental health professional can provide a proper space to express your feelings, offer strategies to cope, and support your emotional well-being. 

Divorce Attorney: This is someone who stands by your side in legal battles, making sure you’re treated fairly. They understand family law inside and out and will fight for your rights. They’ll also help simplify the legal jargon so you can make informed decisions. 

Insurance Broker: An insurance broker will assess your current and future needs, helping you find the right coverage for health, life, and property insurance. This is critical as your circumstances change post-divorce. They act as your shield, making sure you and your assets are protected against unforeseen events.

Real Estate Advisor (If You Own Property): Decisions about property during a divorce can be overwhelming. Whether it’s deciding to sell, buy, or hold, a real estate advisor will help you weigh your options and make the best decisions for your future stability. 

Tax Professional: Taxes can become a maze, especially with the changes that come after a divorce. A tax professional will navigate you through, ensuring you understand the implications, help you avoid costly mistakes, and keep as much money in your pocket as legally possible. By collaborating with a financial advisor, they can form a powerful tax-savings team, optimizing your financial strategy and ensuring seamless integration of tax planning with your overall financial goals. 

Financial Planner: This is my territory. As a CERTIFIED FINANCIAL PLANNER™ professional and financial advisor, my expertise lies in assisting individuals going through a divorce to develop a personalized financial strategy. I ensure that your objectives, from budgeting to investing, are aligned with your new situation. 

Please Note: If you’ve already got trusted professionals, I can collaborate and strengthen your existing team. But if you’re in search of reliable experts, I have a network ready to step in. Having guided many through the financial challenges of divorce, my goal is to ensure you’re supported by the best, every step of the way.

Step #2) Figure Out Where You Stand Financially 

After assembling your powerhouse team, the next pivotal step is to gain a clear understanding of your current financial situation. This means taking a deep dive into the numbers, organizing your financial documents, and assessing where you truly stand. With your team by your side, you’re more than capable of doing the following:

Identify And Collect All Financial Records: Start by gathering every piece of financial documentation you can find – bank statements, investment accounts, retirement accounts, and so forth. This is the foundation of understanding your financial situation. 

Create A Comprehensive List Of Assets And Liabilities: List everything you own (assets) and everything you owe (liabilities). This includes your home, cars, jewelry, loans, and credit card debts. 

Assess Your Current Income, Expenses, Debts, And Assets: Take a close look at your income versus what you spend, along with any debts and the assets you have. This step helps you see the flow of your money – where it’s coming from and where it’s going. Make sure to also consider any child support payments you are receiving (or alimony you’re paying). 

Please Note: Understanding where you stand financially sets the stage for making informed decisions and building a stable future. However, it can feel really overwhelming in trying to figure out where to start. If you feel like you’re drawing in financial chaos, please feel free to use my guide below to start clearing things up. 

Step #3) Create Individual Accounts And Protect Yourself

With a clear grasp of your finances, it’s time to take a big step in solidifying your financial independence. This phase involves reassessing and adjusting key areas to match your single lifestyle, establishing a robust foundation for your financial freedom and ensuring a protected, stable future. It’s important that you:

Create/Adjust Your Budget To Fit Your New Lifestyle: Transitioning to a single-income household necessitates a careful look at your budget. This may involve reducing certain expenses, finding additional savings opportunities, or reallocating funds to match your new lifestyle and financial objectives.

Build An Emergency Fund: Establishing an emergency fund, if you haven’t already, is very important. Aim to save an amount that covers at least three to six months of living expenses. This fund serves as a financial buffer, offering more peace of mind and stability as you refind your footing.

Update Your Life Insurance Beneficiaries: It’s essential to review and possibly update the beneficiaries on your life insurance policies. Life changes, and ensuring that your life insurance reflects your current wishes is crucial. This step guarantees that, in case anything happens to you, the benefits from your policies will go to the people you now choose. 

Update Your Health Insurance: If you were previously on your ex’s health insurance plan, now is the time to revisit your health insurance situation. You may need to obtain new coverage to ensure you’re protected. Health insurance is huge, not just for emergencies but for ongoing health maintenance, so securing your own policy needs to be a top priority.

Revise Your Will: Just like updating your insurance policies, revising your will to reflect your current circumstances is key. This might include changing beneficiaries or instructions on how to manage and distribute your estate. It ensures your assets are handled according to your latest wishes.

Please Note: Don’t feel like you need to have all of your financial ducks in a row to create a roadmap. By working with a financial thinking partner, You’ll notice that creating the right roadmap for you involves

Step #4) Learn How A Financial Roadmap Can Reshape Your Life

Embarking on the next phase of your life after a divorce presents a unique opportunity to redefine your future. In my time as a financial advisor, I’ve helped many people create a financial plan that’s designed to support their newfound dreams, goals, and the lifestyle you envision for yourself. Our collaboration will help ensure your financial plan is robust, flexible, and perfectly tailored to you. Here’s how we will approach it:

Goal Setting: Post-divorce, your priorities and dreams may naturally evolve. This is a prime opportunity to design the new you by identifying financial goals that resonate with this season of your life. Whether you’re aiming for home ownership, further education, or that dream vacation, setting clear and achievable goals is the first step toward constructing a future that truly excites and reflects your renewed sense of self.

Investment Strategy Review: With changes in your financial situation, reassessing your investment strategy is key. We’ll examine your current portfolio, risk tolerance, and investment goals to ensure your investments are aligned with your new objectives and life circumstances.

Retirement Planning: Your retirement accounts and plans may need a reevaluation to reflect changes in your financial landscape. We’ll look at your existing retirement savings, how they’ve been affected by the divorce, and strategize ways to rebuild or optimize your retirement planning, ensuring a secure and comfortable future.

Insurance Planning: Your insurance needs may change significantly after a divorce. We’ll review and possibly adjust your life, health, and disability insurance coverages to ensure they’re aligned with your current situation. This includes assessing whether you need to establish your own policies or update existing ones to better protect yourself and any dependents.

Estate Planning: Updating your estate plan post-divorce is crucial. This includes revising your will, powers of attorney, and healthcare directives to reflect your current wishes. It’s about making sure your assets and responsibilities are handled according to your desires should anything happen.

Tax Planning: Your tax landscape shifts post-divorce. Your investments need to shift toward tax efficiency, aiming to lower taxes on retirement income and ensuring more of your wealth goes to your heirs and charities, not Uncle Sam. This involves strategic planning to leverage tax credits, deductions, and efficient handling of support payments, maximizing the benefit to your loved ones and favored causes. 

Please Note: The above planning will ultimately be in support of your vision of the future. I know it’s a lot to take in especially when you’re recovering from something like a divorce. So, if you’re unsure of what your ideal future looks like, please don’t worry. I’ve created a guid to help you start working through the mental and financial process of rebuilding your life.

Step #5) Get A Financial Thinking Partner To Stay On Track

At Snowpine Wealth, I, Ryan Smith CFP®, have dedicated myself to guiding clients through the financial complexities of life post-divorce. Recognizing the immense challenges and emotional toll of this transition, my approach goes beyond mere financial planning. 

I actively collaborate with a trusted network of professionals—from lawyers to therapists—to help ensure a holistic recovery and growth strategy. That said, I’m also happy to work with any trusted pros you already have at your side.

From rebuilding personal finances to revising estate plans, my role has been to provide clarity, strategy, and a path forward. Whether it’s aligning your financial goals with your newfound independence or ensuring your assets work in your favor, my commitment is to tailor a plan that reflects your unique situation and aspirations.

If you’re ready to take the next step towards financial independence and security, I invite you to book a complimentary appointment with me. Use the button below to begin crafting a future defined by resilience and prosperity. You’re not alone in this. 

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor.Fixed insurance products and services not offered through Commonwealth Financial Network®.