Navigating Financial Independence for Women: Steps to Reclaim Your Economic Power After Divorce

Most people don’t enter into a marriage with the intention of divorce. And even if they do, most divorces are not amicable and take a toll on both parties.

Divorce causes an emotional blow. Additionally, one of the most unfortunate effects of a divorce is the financial worries it brings. As a result, some people stay in unfulfilling and toxic marriages.

Financial independence after a divorce is worrisome, and you must undergo a tough relearning and rebuilding phase.

 

First, you must educate yourself on certain concepts, such as budgeting, personal finances, credit scores, etc.

If you do not currently have a source of income, you could become overwhelmed. Also, if you weren’t concerned with the financial aspects of the marriage, you’ll have a long way to go.

But you’re not alone in this struggle. None of these situations are impossible to deal with. You simply need to learn a few things to get back on your feet.

After reading this article, you will know how to reclaim your economic power after a divorce.

The Harsh Effect of Divorce on Women

You’re about to learn how to reclaim your economic power via financial independence. But first, let’s consider why you should make this your priority.

Divorce is very expensive. The cost of a divorce lawyer and the divorce proceedings are hefty. Also, you must start to reorganize your life afresh.

Divorce affects women. So, a usually tough divorce will have a greater impact on a woman.

For these two important reasons, you must learn how to get back on your feet after a divorce.

Understanding Your Financial Situation

To start reclaiming your economic power, you must first understand your financial situation. The following steps will get you started:

Update Your Documents and Accounts

One of the first steps to reorganizing your life is updating all your documents and accounts. Let your insurance companies know about the divorce.

For example, if you and your spouse had a shared health insurance plan, one of you may need to sign up for a new one.

Next, update your life insurnace policy beneficiaries. Then, look at your retirement accounts and any accounts on which your spouse is a beneficiary.

In some cases, getting a person’s name off a loan might require refinancing.

If your divorce caused a name change on your documents, you must change it. You must also change your name with the Social Security Administration.

Do the same for other documents and accounts your name change can affect.

Audit Your Financial Situation

Your finances post-divorce will look very different from your pre-divorce finances. As a result, you must audit your financial situation and take stock of the value of your assets.

Depending on your marriage and the divorce proceedings, your assets may be a car, house, money in the bank, or land.

After knowing the value of your assets, count your debts. Most people come out of a divorce with more debt than they had at first.

Finally, calculate your monthly income and expenses, including your debts. This will help you determine where your income goes.

If your monthly income is more than your expenses, great. If it’s not, we’ll discuss what you must do.

Set Up a Financial Plan

After an audit of your financial situation, you must create a financial plan. You must start from scratch, as the new plan will be completely different from the one you had while married.

Your plan must include:

• Your monthly budget: Adjust your budget until your expenses are less than your income. Use the 50/30/20 rule. Set out 50% for necessary expenses. Budget 30% for non-essential expenses and 20% for savings and debt clearance. Ensure to account for co-parenting expenses and child support, if necessary.
• Your debt clearance plan: If you have any accumulated debts, you must make a plan to pay them off.
• A savings plan: We’ll talk about building an emergency fund later, but know that you need to have a savings plan.

Rebuilding Credit

Rebuilding credit is essential for financial independence. A good credit score makes it easier to secure loans and get lower interest rates.

On the path to rebuilding credit, you must first resolve joint debts with your spouse. Find out who pays for what and close any necessary accounts.

It’s also important to work out how much you owe on joint credit cards and ensure you don’t miss payments. Remember that missing payments may affect your credit score.

Additionally, stay up to date with your bills, including insurance, utilities, and cell phone bills. Paying all your bills on time is the major way to protect your credit score.

If you’re unsure about your credit score, it’s time to start building it. If you were an authorized user on your ex’s credit card, remove your name from that credit line. Also, get a credit card in your name. It’s a good idea to find a card that gives 1% or 2% cashback on purchases.

Additionally, you could also become an authorized user on a trusted family member’s credit card. This process will help build your credit score.

Try to keep your credit card use to at most 30%. The percentage of total credit you’re using is a very important factor in your credit score.

Increasing Income

Boosting your income can have a great impact on your financial stability.

While divorce has its downsides, one the perks is that you’ll have more free time, and you can use that to increase your income.

If you need to apply for jobs, be confident and assertive when negotiating your salary. If you have a side hustle, put in a little more effort. If you have no side hustle, you can start one or become a freelancer.

There are many options out there to help you make more money. For example, you could rent out a spare room on Airbnb.

One benefit of increasing your income is that you can pay off your debts faster. Having extra income could also help you build up your emergency fund.

Managing Expenses

It’s vital to learn how to manage your finances. The following are ways to do just that:

Learn to Downsize

For many people, a divorce usually causes a drastic reduction in household income. As a result, there is a serious need to downsize.

A good way to downsize would be to move to a smaller apartment. Of course, as an advantage, it would be easier for you to clean and fill up with the things you love.

If you have a monthly car payment, you could sell the car and downsize to something cheaper. Otherwise, you could refinance your loan. This will cut your payments in half with lower interest rates.

Downsizing comes in different forms. But the point is to get your monthly payments to a point where they fit into your new budget,

Cut Back On Personal Spending

With a reduced household income, there are certain things you can’t afford to spend on. Before you engage in non-essential spending, check your budget to be sure you can afford it.

You can pamper yourself a little, seeing as you went through an ugly period and are still recovering. But you must be realistic. If you can’t afford some things, check to see where you could cut back.

For example, you could cancel your country club membership or put it on hold. You could change your children’s school. Also, you could talk to the school’s financial aid office about a payment plan or scholarship.

Substitute long staycations with day trips. Remember, this is not permanent but just until you get back on your feet.

It’s important to cut costs without compromising your quality of life. Cook at home and engage in smart shopping, or use cashback apps and reward programs to earn money back on your purchases.

However, remember to focus on self-care and keep funds for activities that bring you joy.

Investing For The Future

The next step on becoming a strong financial woman is to start investing. Below are the following tips on investing for the future:

Build Up Your Emergency Fund

Building an emergency fund is one of the first things you should do after a divorce. If you already have an emergency fund, you could make it bigger. You can achieve this with very strict saving plans.

Remember the 50/30/20 rule. Start putting a little money away until you have about six months of expenses saved.

Investments

Start investing for your future by diversifying your portfolio. By starting small and being patient, you could build up huge funds over the long term. You can also save for retirement through employer-matched accounts or individual plans.

It’s important to consult a financial advisor for a personalized investment plan. Remember to take advantage of tax-advantaged accounts such as Roth IRAs or 529 plans.

Legal and Financial Advice

According to a study by the American Community Survey (2019), women who seek financial advice are more likely to achieve financial independence. There are several guides to help you on this journey. Let us consider a few of them.

Personal Finance Education

To reclaim your economic power, you must engage in personal finance education. Read blogs and budgeting books, listen to podcasts, and read financial news and every financial resource you can find.

Here are some great blogs to check out:

• Her First $100k
• MyFabFinance
• Healthy Rich
• HerMoney
• Clever Girl Finance

Here are some great books about divorce you can read:

• Broke Millenial by Erin Lowry
• Smart Women Finish Rich by David Bach
• The Psychology of Money by Morgan Housel
• Financial Feminist by Tori Dunlap

Here are some great personal finance podcasts you can listen to:

• Financial Feminist
• Money Confidential
• Inspired Budget Podcast
• Journey to Launch
• Money Girl Podcast

Professional Legal and Financial Advice

Consult financial advisors and legal experts for personalized guidance, and consider seeking support from a therapist or support group. These groups can help you get through the emotional aspects of divorce.

Also, remember to review your estate plan, including your will, trusts, and beneficiaries.

Conclusion

Reclaiming economic power after divorce requires patience, persistence, and knowledge. With these steps, you can achieve financial independence. You will also be on your way to building a brighter future.

After a divorce, it may seem impossible to get back on your feet. It feels worse when you consider your debts and weigh them against your monthly income. But it’s very possible.

You can and will rebuild your finances until you are in a better place. Remember to stay positive, focused, and committed to your goals. You’ve got this!

About the Author

As a financial coach, I’ve helped many women navigate financial independence after divorce. If you’re ready to take control of your finances, contact me through my website [link]. You’ll get a free consultation.