Tips for Rapidly Rebuilding After a Divorce or Separation

Rebuilding After Divorce

If you are struggling financially after a divorce, you're not alone. Going from one combined household to two separate ones is expensive regardless of your income or divorce settlement. With a little focus, though, you should be back on track in no time. 

Steps to Rebuilding After Divorce

Consider the following steps to recover your financial situation more quickly.

Step 1: Decide that you are going to improve your financial situation.

The most important thing that you can do is to prioritize improving your financial situation. Sure, you may recognize that your finances are not what they once were, but if you don't take the steps to change your situation, you'll find yourself in the same spot months or even years from now.

Decide to start immediately. You'll thank yourself later.

Step 2: Figure out your starting point

Once you've made improving your financial situation a priority, it's important to know where to start. Take the time to write down all of your accounts including bank accounts, retirement accounts, loans, etc. Document each balance, the most recent return, and/or the interest rate involved.

For savings and investment accounts, include how much you are contributing to those accounts each month. If you have debt, make sure to include whether the interest rate is fixed or variable along with the minimum payment you are responsible for.

Step 3: Identify the areas where you need to focus

Once you've evaluated your starting point, you'll be able to see areas that need improvement. If the issues aren't clear, start by asking yourself the following questions:

• Is your savings account balance lower than you would like it to be?
• Do you have high-interest debt that needs to be refinanced and/or paid down?
• What about your expenses? Are there areas in which you could reduce spending? If not, do you need to increase your income.

Everyone's financial situation is different so your areas to focus on will be unique to you. If you need help identifying and/or prioritizing where to focus, contact me.  

Step 4: Set goals and create a plan

Once you've decided where to focus it's time to begin setting specific, measurable and time-bound goals for yourself. For example, a goal might be to increase your emergency savings account by $10,000 over the next 12 months. It might be tempting to skip this step, but without a goal, there can be no plan, and without a plan, failure is inevitable. 

Use the goal you've set to create your plan. If your goal is to save $10,000 over 12 months, then you'll likely need to put away roughly $840 each month. How will you do that?

• Will you split that amount up weekly?
• Will you change your direct deposit to go directly into your savings account?
• Do you need an additional income to be able to achieve your goal?

Put the plan in place ahead of time so that there's no guesswork as to how you will meet your goal.

Step 5: Get an accountability partner

People who regularly meet their goals are most likely to have accountability partners. Find someone you trust that you can share the details of your plan with. Make sure it's someone who will ask you the hard questions and keep you motivated to press forward with your goal, even when it doesn't feel like fun anymore.

If you don't have someone in your life who can serve as your accountability partner, contact me. Sometimes professional support is just what you need to accelerate your results.