Post-Divorce Finances and You

Don’t be caught unaware by the changes in personal finance that come with divorce

After a divorce your finances change. Sometimes the credit has all been in one person’s name, and the other is left to start from square one. Then there are things like join investments to consider, and, of course, your expenses may change as well. Alimony and child support must be taken into account, and just the cost of day-to-day living is likely to be very different.

We recently came across a Forbes article that had some good advice, and thought we would share it with our readers:

Update accounts. Even though it may sound mundane, this financial housekeeping step is absolutely essential. If you changed your name as a result of the divorce, you’ll need to get a new Social Security Card, driver’s license, passport and credit cards. You’ll also need to notify your bank, utilities, insurance companies, credit card companies, the motor vehicle department, your children’s school(s), etc. about any change of name and/or address. The titles on all assets, such as cars and houses, will have to be modified and recorded with mortgage companies . . . and it’s likely you’ll want to update beneficiaries on your life insurance, 401k, pensions and IRA accounts, as well.

Develop a comprehensive financial plan. If you had a Lifestyle Analysis prepared during your divorce, you should have a very clear understanding of what funds came into the marriage (income) and what funds went out (expenses). Use this as a basis for developing a budget going forward. Of course, you’ll need to keep tabs on financial matters in the short-term (What are your day-to-day expenses? How much are monthly utilities, the mortgage, car payments, etc.?), and you’ll need to establish a plan for the long-term, as well (Who is going to pay for college tuition? What do you need to save for retirement?). If your divorce settlement agreement included any lump sum payments (for alimony, pension rollovers, sale of a vacation home, etc.), you’ll also need to develop a sound strategy for management of these assets. Establishing –and then sticking to –a financial plan is essential for financial stability . . . and peace-of-mind.

Build your credit. Good credit forms the foundation of your financial portfolio and will help you secure loans in your name in the future. The first step in building good credit is to get a copy of your credit report. ( offers them for free.) Your current credit score is the starting point for your future, so make sure you address any inaccuracies in the report. If you are employed and/or already have credit cards in your name, the process of building your credit will be relatively straightforward. Use your credit cards regularly, pay off the balance on time each month, and you’ll watch your credit score rise. However, if you’re not employed and don’t already have a credit history in your name, the process is not as simple.  New federal regulations are making it more difficult than ever for women with little or no income to establish credit on their own, so prepare yourself for the possibility that securing credit could be somewhat time-consuming and is likely to require more than simply filling out an application or making a single phone call.

If you don’t already have a financial advisor, ask your attorney to refer you to one that’s familiar with the common hurdles faced during and after divorce. As with so many other things in life, it pays to have someone who specializes.