How To Survive Divorce Financially


A divorce can be hard financially, but surviving the aftermath is doable, as long as you prepare and follow the right steps. There are steps you can take on a personal basis, such as monitoring your income, as well as those on a legal or practical basis to help mitigate the financial damage often brought by a divorce.

No one goes into a marriage expecting a divorce. If you look at most marriage vows, they will, in many cases, have the phrases “rest of my life” or “until my dying days,” mentioned throughout the text. Marriage is supposed to be for life, but this isn’t always the case.

The reality is that about 38% of marriages in the United States end in divorce. Besides the implications that a divorce can have on your family, children, and emotional well-being, it can also have major financial implications. If you’re bound by a prenup, then you probably have a good idea of those financial implications. If not, then the financial implications are, in some cases, unknown and possibly devastating. Keep reading to learn more about how to prepare yourself financially both during and after divorce proceedings finish.

What should you do to prepare financially for a divorce?

If you are going through a divorce, planning on asking for a divorce, or just interested in what that might look like, the first thing to consider is how your life might change afterward. In most cases, you can make changes to your financial planning that will be a key tool in surviving a divorce.

Expect your income to drop

Expect your income to drop after a divorce, even if that doesn’t end up being the case. For couples divorcing after age 50, men’s household income drops by only 23%, but women’s decreased by a considerable 41%. If you were the sole breadwinner, alimony and child support might be on the table.

If you are the nonworking spouse and didn’t earn any money during your marriage, prepare for your income to drop below your expectations. This way you can start to prepare a monthly budget that will be better suited to a post-divorce financial life.

New monthly budget

A new monthly budget is one of the simplest steps you can take to ensure that you survive financially after your divorce. The easiest way to do this is to take a snapshot of your current monthly budget and base it on that. You can make a new monthly budget and save a considerable amount of money by trimming around the edges of your expenses.

You might even want to consider a different amount to keep in your emergency fund, depending on where you’re at financially. Make sure you keep your emergency fund in a separate account — like one of the savings accounts below — to maintain your financial independence after divorce.

Trim around the edges

Do you know what you currently spend money on and how that affects your household income? In many cases, you can live a similar lifestyle to what you did before, with less of a budget, by cutting nonessential purchases.

If you like steak but always buy Wagyu, then switch to the cheaper steaks at your local supermarket. If you pay for four different TV subscription services, pay for just one. There are all sorts of ways you can trim your budget, while still doing the things that you enjoy.

Related reading: You may hear also this process referred to as “living below your means.” To learn how to live below your means, take a look at our article discussing the strategy and tips on how to achieve a better financial future.

Create new financial goals

Even if your finances have been or will get damaged and decreased by a divorce, now is not the time to give up on your financial future. You probably reached your pre-divorce financial situation by giving yourself financial goals on a regular basis. Now is not the time to give up on your overall goals and pathway to financial independence.

If you had goals before you got divorced, then edit them to reflect the change in your finances. You can also set entirely new financial goals that you might not have even considered before the divorce.

Pro Tip

If you struggle with outlining your financial goals (especially if a divorce will upset those goals), start planning and achieving your financial goals with the help of a financial planner or advisor.

Practical and legal ways to survive a divorce

Now that you’ve prepped a new financial life for yourself after a divorce, it’s time to outline your current assets and legal obligations.

Understand your assets

Of course, this is ideally something that you do before you get divorced. Whether you’re speaking to your lawyers or just considering what the impact of a divorce will be, a complete understanding of what you own is a must.

  • Retirement assets (401(k), 403(b), Roth IRA, etc.)
  • Liquid assets (cash, bitcoin, gold)
  • Real estate
  • Personal property (wine collection, baseball cards, etc.)
  • Cash value life insurance
  • Business interests

Understanding your assets is absolutely imperative to surviving a divorce. You can then pick and choose the assets that you feel are more critically important to you, and hopefully retain them in the divorce.

Pro Tip

While you may not consider this an asset, make sure you have a solid understanding of what your post-divorce health insurance will look like. If you have a joint plan, for instance, you’ll want to start looking for a new health insurance policy before the divorce is finalized.

Decide what to do with the house

In divorce proceedings, the easiest way to resolve the problem of shared property is to put the property on the market and split the proceeds. However, as most of us know, this is rarely the case. In most cases, one of the divorcing parties will want to keep the house to provide stability for the children and just general convenience.

However, there are circumstances in which, if a divorce were to happen, neither party would be able to afford the property on their own. If this is your own situation, here are some options:

  1. Rental property. Renting the house to a third party or through an online business. On the other hand, a former spouse could stay in the home and pay some sort of rent.
  2. “Bird nesting.” The ex-spouses retain joint ownership but also rent another property nearby. Each one alternates living in the house with the kids and in the apartment on his/her own.
  3. Sell the property. If neither of the above options is possible, the ex-spouses may need to sell the home and split the proceeds, regardless of whether this ends up as a loss.

If this cannot be achieved, then the next step is a foreclosure and even bankruptcy filings. Having an idea of what’s going to happen to the jointly owned home can help you prepare how to handle the divorce afterward.

Recognize your legal obligations

If you were the sole breadwinner or made the majority of the money, then you need to start considering what you’ll pay in child support or alimony. A quick Google search will provide you with various child support and alimony calculators for your state.

In a legal sense, this should start giving you a ballpark idea of what you are on the hook for. You can then model your finances based on the confirmed figures.

Understand your after-tax asset value

Many couples looking at divorce or are in the process of divorcing will have a tax-deferred or tax-advantageous retirement account or education plan set up together. Roth 401(k)s, Roth IRAs, and 529 plans are common examples.

The spouse who gets the retirement plan will end up with the existing plan, plus the already-used tax deferment. The other spouse might not end up with the plan, but they will have the ability to start from zero with a future pension.

Pro Tip

In addition to planning out your retirement accounts post-divorce, make sure you work out which spouse will claim any children on their tax returns. This may be especially difficult if you agree to split custody evenly.

Separate your bank accounts

For those people that are very early in the process, asking to separate your accounts could be the “writing on the wall” that facilitates that long overdue conversation about divorce. However, separating bank accounts is a smart move if you’re thinking about a divorce or starting the process. The first accounts you should separate are joint savings accounts held by both spouses.

But keep in mind that a separate bank account won’t usually protect your assets from being divided in a divorce. Another helpful way to separate is to begin to list the debts that might exist and try to divide those if possible. If shared, health and auto insurance are other items you might want to consider separating.

Looking for new post-divorce checking account? Start comparing your options below so you can keep your funds accessible at any time.

Hire the right people

At the end of the day, unless you’re a divorce lawyer, a tax accountant, or a financial advisor, there are people who know way more about how to financially survive a divorce than you do. (Even divorce lawyers will have their own lawyers.) Despite the account and legal fees, having a good CFA, financial advisor, or attorney can be extremely helpful when trying to find that post-divorce light at the end of the financial tunnel.

There is even something called a certified divorce financial analyst (CDFA) that specializes in looking over finances related to a couple going through an imminent divorce. If you and your soon-to-be-ex-spouse have considerable wealth and assets, you may want to start looking through certified divorce financial analysts earlier rather than later.

IMPORTANT! Divorce attorneys can be a great help during the process, but that doesn’t mean affording them is easy. If you’re not sure how to prepare for a divorce settlement and pay for legal fees, take a look at our article discussing your options.


Who is better off financially after divorce?

There is no cut-and-paste right answer to this as it depends upon the situation. It’s best to do the numbers yourself and speak to a professional before questioning who will be better off financially after a divorce settlement.

How long does it take to financially recover from divorce?

While it can take some time, financially recovering from a divorce is doable. But again, there is no exact answer to this question. Depending on both parties’ financial situations, it can take anywhere from a few months to years.

How do I financially protect myself in a divorce?

The easiest way to protect yourself is to establish a prenup. However, since not many of us consider a prenup other than the very wealthy, make sure that you understand your complete financial situation from a legal and practical standpoint. Then try and use personal finance tips to develop a budget for your post-divorce life.

How do I not get financially ruined in a divorce?

Sign a prenup. If that doesn’t apply to you, then make sure you follow the steps above to protect yourself and plan for life as a single person.

Key Takeaways

  • A divorce can be financially difficult, but surviving the aftermath is doable as long as you prepare and follow the right steps.
  • One way to prepare financially is by creating a new budget and cutting back on your own finances and living costs. You can start doing this by living below your means and adding additional funds to a separate savings account.
  • Another way to prepare is to look at things from a legal or practical standpoint. Separating accounts and deciding what to do with a joint property are some of the first steps.
  • Consider hiring a professional or team of professionals. These people are paid to know way more about the divorce process than you do.
View Article Sources
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  2. Publication 504: Divorced or Separated Individuals — IRS
  3. 10 Things You Need to Do When You Get Divorced — SuperMoney
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  5. How To Prepare For Divorce — SuperMoney
  6. How to Pay for a Lawyer When You’re Short On Cash — SuperMoney
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  9. What Is a Prenuptial Agreement and Is It Ever a Good Idea? — SuperMoney
  10. Who Claims a Child on Taxes With 50/50 Custody? — SuperMoney
  11. The Ultimate Guide to Budgeting — SuperMoney