Divorce is notorious for wrecking financial savings and stability. However, your ending relationship does not have to be the reason you spend the rest of your life working.
Knowing how divorce could impact your financial situation can help you prepare for your next steps. Taking a proactive approach to controlling your loss and minimizing repercussions can help you determine the success of your future.
Splitting assets and debts
Perhaps the most obvious financial impact that comes from divorce is that you will split most of your assets and debts with your ex. With roughly half of your financial savings intact, you may feel overwhelmed at how much you lost. Similarly, the responsibility of paying debts without the support or contributions of a second person may create stress and uncertainty.
Even though your settlement is only a fraction of what you once had, you can use what you have as a foundation to rebuild. Refrain from the temptation to spend frivolously and use your settlement right away. Rather, strategize to find ways to optimize what you have so you can stretch your money. Some things you can do include the following:
- Rollover any retirement savings into a personal retirement account
- Develop a plan for paying back debts as quickly as possible
- Focus on your career and find ways to increase your income
- Redesign your budget and live within your means
Redesigning your budget
Adjusting to financial independence may feel much easier when you have a game plan. According to U.S. News, even after you make a budget, continually monitor your spending activity. Document your expenses and your savings. Increase the amount of money you save whenever you can.
If you reach a point where your income expands, you may consider investing or finding creative ways to grow your money. You can use your divorce as an opportunity to create the future you want.