How Divorced Moms Can Make Smart Financial Choices
Whether you’re planning for divorce, in its midst, or have made it through to the other side, one of your most significant considerations will have to be your finances. Where you once had your partner’s income, insurance, and savings to fall back on, you’re now self-reliant.
Many newly divorced women panic about this change in financial position, which isn’t surprising when 58% of women leave control of long-term financial planning entirely to their spouse.
Divorced Moms Can Make Smart Financial Choices
However, with the right amount of planning and research, you can use this situation to take control of your assets and make great goals for the future.
1. Plan Ahead
When you’re the one thinking about getting a divorce or know it’s on the way, you should take measures right now to secure your financial future. You can start getting your name on or off essential accounts.
Setting aside money as an emergency will also help if you need to take time off in the aftermath to go to court or arrange child care or if you need to look for a job after being a stay-at-home mom.
Get copies of any shared financial documents and know how to access everything else you need.
2. Find a New Financial Advisor
While you may think you’re in this new phase alone, you have people you can ask for help. First on your list should be a financial advisor. You may know someone who you and your ex used before. However, it’s in your best interest to use a different professional. Then, you won’t have any conflicts of interest or account mix-ups.
3. Weigh Going to Court
It’s typical to want to take your ex to court during divorce proceedings. Doing so may bring you more closure, but it may not be practical in your situation. Work with your financial advisor and lawyer to determine if going to court will earn you much more than it will cost. Lawyers and time before a judge are expensive, and you may not win enough to make it worth your time and money.
4. Prepare for Taxes
As a single mom, your taxes will look quite different than they did before. You’ll only have your income to claim, and your insurance and assets will have changed. Keep track of all your changes and deductible expenses, so you aren’t surprised come tax season.
One tax item most newly divorced moms miss is their alimony. If you get monthly alimony checks from your spouse, you should set a portion aside in savings. This money is taxable income, but the government takes nothing out monthly. Tucking some away each month will ensure you have enough to pay your taxes on it in one lump sum in the spring.
5. Create a Budget
Creating a budget is the easiest way to get your financial feet back under you. One you’d been using when you were married won’t work the same anymore since your income and expenses have likely changed.
Use this time to assess your priorities and goals. You’ll need to set aside money to cover basic expenses like shelter, utilities, and gas. You must also plan for things like medical expenses, health insurance, and school supplies.
Your best bet is to account for every penny so you aren’t tempted to spend more than you should. Set aside some fun money within your means for you and the kids. Other extra income could go toward your savings and retirement goals.
6. Increase Your Earnings
Your biggest concern initially is ensuring you have a job that can pay for all your family’s necessities. It may mean reentering the workforce, finding a new job, or working to move up in your company or earn a raise.
You could also turn toward a side hustle like babysitting in the evenings, taking online surveys, starting a blog, or selling your crafts. Assess your skills to see if you have another way to increase your income.
7. Reduce Your Spending
Another way to ease your budget is to reduce your spending. Even if you can bring in more money with side hustles, a new job, or a promotion, you’ll still probably have less money than when you were married.
Decide what recurring expenses can go. Do you need to have every streaming service? Could you cancel a subscription box? Try using coupons on your groceries and cutting down on the amount you eat out.
You may even need to cut spending further by moving into a smaller home or apartment or downgrading your vehicle. Remember, you can always save and upgrade again in the future if you want. For now, keep your eye on getting by and building your emergency fund and retirement.
8. Save for Retirement
Once you have your short-term finances in hand, you must turn toward the future. Retirement will sneak up on you if you’re unprepared. You should be setting aside at least 15% of your income — employer contributions count toward that goal. However, you can and should add more to help provide a cushion for yourself in later years and support the life you’ve become accustomed to. A heftier retirement fund will also allow you to help your kids financially as they start their lives as adults.
9. Set Financial Goals
While it may seem daunting, now is the time to dream big for yourself and your kids. Instead of living only in the moment, think of where you want to be in a year, five years, and even further into the future. Make changes to your finances right now to align with your plans.
You Can Handle This
Right now, it may seem like the world is crumbling around you. The weight of your and your children’s financial future rests on you. However, your attitude moving forward will dictate how well you do. Remaining future-focused by setting goals and planning will set you up for success. You’re a strong and capable mom. You’ve got this!
