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How to Survive Financially After Divorce

Man trying to survive financially after a divorce.

No one plans on getting divorced—but it happens, and it is something you can survive. The emotional turmoil and uncertainty aside, one of the biggest challenges that come with the territory is rebuilding financially after divorce. What happens to your money and bank account? Your shared debt? What about child and spousal support?

When figuring out how to survive financially after divorce, there are a lot of questions and unknowns to dig into. Let’s take a look at the basics.

How Is Marital Debt Divided After Divorce?

Marital debt is any debt you and your spouse took on together on behalf of your family. You and your spouse may, either with or without support from a lawyer, decide who is responsible for repaying that debt. You may decide to split the cost of payments on each debt or divide your debts equally.

But no matter what you decide, if your name is on a loan, whether as a borrower or co-signer, the lender still holds you accountable for paying that debt. Even if your ex agrees to pay and defaults, your credit will take a hit and the lender will expect payment from you. To protect yourself, request that the lender remove your name from the loan (not likely, but possible) or refinance your loans.

How Do Child Support and Spousal Support Work?

Spousal support, or alimony, is paid to one spouse to help them maintain the lifestyle they had while married—for example, if one spouse makes more money than the other, they may pay spousal support. This support isn’t given automatically; it must be asked for and granted in court.

Child support is paid to support the basic needs of the children of a divorced couple. Whether child support will be paid, by whom, and how much is usually determined in court based on custody arrangements and parent incomes.

How Do I Survive Financially After Divorce?

There are definite financial benefits to most marriages, such as:

  • Two incomes
  • Reduced childcare costs
  • Shared household expenses
  • Tax benefits

So when a marriage ends, you may be wondering how to survive financially after your divorce. These quick tips will help you start thinking about rebuilding your financial health.

1. Create a New Budget

You now have different expenses and income than before the divorce. Whether or not you receive spousal and child support, you may have a lower income—and may or may not have fewer expenses. Consider how much you make each month and how much you spend, and make any necessary changes to cut back on expenses and build up your income. Start off your new life with a new budget and awareness of your individual finances.

2. Get Your Own Credit Card and Bank Account

Many married couples use joint accounts. As soon as possible, create your own credit card and bank accounts to start building your own credit, earning savings, and taking control of your finances. This is also a good time to look up your credit score and get an idea of how you can improve it.

3. Pay Off Debt

Divorce can leave you in debt from legal bills and lingering marital debt. Make a plan now for how you will pay it off. Refinance your shared debts so you won’t be hit with fees and a lowered credit score if your ex doesn’t make loan payments even after agreeing to. Getting out of debt now will pay off in helping you rebuild financially after divorce, so any sacrifices you can make to eliminate expenses and put more money toward getting out of debt will be worth it.

4. Change Your Tax Withholding Status

Divorce changes your tax situation since you are no longer filing jointly. Update your tax withholding status with your employer now, whether you need to file as head of household or single, or if you no longer list your kids as dependents. If you don’t update this now, more may be withheld from your paycheck than necessary, making cash flow tighter, or less may be withheld, causing you to owe a big repayment to the IRS at tax time.

5. Get Your Own Health Insurance

Your divorce decree may require you to keep your spouse on your health insurance, or vice versa. If not, remove your ex from your plan so you aren’t subsidizing their healthcare, or begin looking for your own health insurance options. You may qualify for insurance through your employer, subsidized insurance through the healthcare marketplace, or even Medicaid.

6. Increase Your Income and Earning Potential

When your budget is smaller, but you’re paying for more expenses on your own, you can only cut back so much. Instead, focus on increasing your income. Look for a better-paying career or pick up a side hustle or gig-economy job. Consider investing in additional education or training—use the divorce as an excuse for a fresh start toward building the career you always wanted.

Survive and Thrive After Your Divorce

Rebuilding financially after divorce may seem like a daunting task. And it definitely is, but it is something that you can do. Follow these steps to get started down the path to making your own way financially and independently.