Plan an exciting new future: 4 ways to manage your finances after a divorce

Learn how to get your finances in order and chart a new course after divorce.

Like so many single parents, Emma Johnson, 40, founder of, worried about rebuilding financially after divorce and what the financial future would look like for her and her children, who were 2 and under 1 at the time.

“I was terrified that my kids and I would be living out of our car,” she says, “or that I would have to sell my home and move far from our community.”

Single father spending time with young son

Rather than continuing to see the prospect of managing finances after divorce as frightening, Johnson decided to use the life-changing 2010 event as an opportunity to re-evaluate her plans and create an exciting new future. She resumed working as a journalist and started her blog. This ultimately led to brand partnerships, speaking engagements and a book deal with Penguin Random House, not to mention new financial goals, including saving enough to retire by the time her children go to college.

“It is very scary to start out on life anew and without a partner,” she says. “Harness this fear to forge a new, exciting path that is free from an unhappy marriage. Your Plan B or C or Q can be far, far more fulfilling than you imagined.”

From separating joint bank accounts after divorce to revamping your financial plans, here are four things you can do to get your finances in order and chart a new course after divorce:

1. Update your budget

Getting divorced can come with financial costs and changes. From attorney’s fees to the tax consequences of selling assets, you may face some short-term financial expenses that could put a strain on your budget. For many people, managing finances after a divorce means spending less because you’ll only have your own income to draw on, and you might have to pay child support.

Jackie Pilossoph, 51, founder of Divorced Girl Smiling, got divorced in 2008 and found that getting a detailed understanding of what she was spending and what she was bringing in was critical. It helped her find places in her budget where she could cut back.

“I called all my utility companies and had the bills lowered, either through cutting plans or getting a better deal. I put a cap on Starbucks and allotted myself a weekly amount,” she says. “I also stopped buying bottled water, refinanced my home, stopped getting my nails done and basically didn’t buy myself a stitch of clothing for about two years.”

Mother and daughter baking together

Other ways to trim costs and manage finances after divorce might include finding opportunities to save on attorney’s fees or making budgetary changes like downsizing your home, eating at home more often or even scaling back your children’s extracurricular activities.

While these changes can be difficult to make, Johnson, of WealthySingleMommy, believes that you need to be open to a new lifestyle after a divorce in order to create a future on firm financial footing.

“Let go of trying to maintain the lifestyle you had while married,” she says. “You don’t need the stress associated with being over-leveraged on a home, living in debt, penny pinching or living paycheck to paycheck.”

“The good thing about divorce is that you are solely responsible for your financial future from this point forward. When you start seeing financial success from your own plan and your own job, there is no better feeling.”

Jackie Pilossoph, founder of Divorced Girl Smiling

2. Evaluate your accounts

Just because you had certain kinds of banking and investment accounts as a couple doesn’t mean they’re necessarily right for you now as you rebuild financially after divorce.

“For both practical and emotional reasons, you need to evaluate every part of your financial picture during and after divorce,” Johnson says. “You now have to plan for a life without a spouse and invest appropriately based on your new lifestyle, goals and dreams.”

Woman deciding what do to with her joint bank accounts after divorce

She suggests asking your accountant about your new tax situation, your financial planner about college, emergency savings and retirement planning and your attorney about estate planning. You could even explore finding an investment adviser who specializes in managing finances after a divorce.

Take the time to understand the details of your various accounts, such as how much you’re paying per month in fees, how many no-fee transactions you get and how much you’re earning (or paying) in interest. Perhaps you don’t need the pricier checking account that includes so many transactions. Or maybe your bank requires a high minimum balance to waive the monthly fee on your savings account, and now you’re looking for an account that has no monthly fee for maintenance. Maybe you do need a new credit card since your old one was a joint account shared with your ex.

If you’re taking stock of your joint bank accounts after divorce and close any credit accounts, pull your credit report to make sure all joint accounts are closed. If you want to ensure that new credit accounts aren’t opened in your name, you could consider putting a credit freeze on your report by contacting the three national credit reporting agencies: Equifax, Experian or TransUnion.

When thinking about joint bank accounts after divorce, you may also consider removing your ex-spouse as a beneficiary on retirement accounts, life insurance policies and from your will.

Rebuilding financially after a divorce often starts with a budget

3. Define your goals and priorities

Just because you and your former spouse wanted to retire to Hawaii doesn’t mean that’s still your dream now.

“One of the saddest things about divorce that I hear from men and women is that the dream they always had is gone,” Pilossoph says, explaining that feeling is often only temporary. “What happens over time is that the dream just changes, and honestly, most of the time, it changes for the better.”

For Pilossoph, that’s meant that she’s developed dreams of retiring and moving to a warm Southern state, which she hopes to achieve alone or with a different partner.

She believes that rebuilding financially after divorce is a great time to rethink what you want to do professionally as well. Maybe you would rather stay home with your children, switch careers, find a better work-life balance or go back to school.

“Divorce is a great time for soul searching,” she says. “Divorce often makes people re-evaluate life and explore what is really going to make them happy.”

4. Sit down with a financial planner

Rebuilding financially after divorce and setting up a new financial plan can help you feel better prepared for life after your marriage ends. Although Pilossoph wanted to continue to stay at home with her children, who were 3 and 5 at the time, her financial planner helped her realize that wasn’t a good financial decision over the long term.

“It took a really good financial planner to get me to sit down and face reality. They forced me to look at what I was spending every month and what I was bringing in,” she says. “They made me see the deficit I was dealing with, and seeing the numbers on paper made me realize I had to make some changes.”

In addition to cutting back on expenses, she decided to return to work. She wrote a book, launched her blog and took a job with a newspaper.

A financial planner can be a critical resource when managing finances after a divorce, helping you turn your new short- and long-term financial goals into realities. They can clarify what you need to earn, how you need to save for retirement or your children’s futures and how your newly single status affects your taxes.

Divorcee meets with a financial planner to discuss his joint accounts after divorce

Stay focused on the positives

While divorce is undoubtedly an end to something important in your life, it is also a new beginning. If you look at it from that perspective, you may find it easier to focus your attention on rebuilding financially after divorce, rather than mourning the changes in your financial situation.

“The good thing about divorce is that you are solely responsible for your financial future from this point forward,” Pilossoph says. “When you start seeing financial success from your own plan and your own job, there is no better feeling. Looking in the mirror and being proud of your accomplishments and the way you live your life is very powerful.”