Not only can does it divorce come with emotional challenges, it has own set of practical concerns as well. One of them being finances. If you’re recently divorced, it can be hard to figure where to start from with your finances. Especially, if you have not actively managed money before. It may feel overwhelming or intimidating to manage financial stress – while handling the emotional stress of a divorce.
Here are a few simple strategies to help you rebuild your finances and your financial confidence :
1. Start reading up & ask questions
The first step as a woman who has kept away from money management – is to start reading up on personal finance. Pick up easy to read books for beginners like The Psychology of Money, Your Money or Your Life, Rich Dad, Poor Dad or Let’s talk money by Monica Halan. If you are unfamiliar with some concepts or products, ask questions to your trusted family, friends and colleagues.
Don’t blindly follow any advice, just yet. Take it slow & be kind to yourself on this new journey.
Consider taking up online financial courses, which can be done at your own pace – check out a few courses offered by Womoneysta on topics like financial goal-setting, mutual fund investing, gold investing ,etc. exclusively curated for women.
2. Create a budget and stick to it.
When it comes to managing your finances after a divorce, it’s important to set up a budget. To do this, you need to define what exactly your income and expenses are like. You should also understand the difference between fixed and variable expenses. Fixed expenses include things like rent or mortgage payments on an apartment or house; these tend to stay the same throughout the year regardless of how much money you make from work each month. Variable expenses such as gifting, eating out, shopping are spends which can be controlled/ removed, if they don’t fit our pocket.
By knowing how much money comes in each month (your income), understanding where all that money goes every month (your budget) and keeping track of any unexpected costs incurred during those months, you’ll be able to identify how much you can save every month for meeting your future goals.
Looking for a smart way to budget, pick up Womoneysta’s Budgeting Tracker here.
3. Take stock of what you have now.
This is also a critical time to do an inventory of all that you have in terms of assets & liabilities. Who owns what? If you’ve been married for a while, there might be joint assets like home or investments, etc. Get hold of all your bank records, income tax records, insurance & investment documents, any property investments, etc. Don’t forget to check if there are any loans with your name on record.
Take note of any questions while putting the documents together – like how much will the home maintenance cost or which insurances can be easily liquidated on need, etc.
4. Build up an emergency fund as a priority.
If you’re newly divorced, one of the first big money goals is to have enough money available so that when unexpected expenses arise (like car repairs), they don’t completely derail your financial health. Enter, Emergency Fund.
How much should be in place? The general rule of thumb is that if you want to cover six months’ worth of living expenses, including rent, groceries, EMIs, any childcare spends, lifestyle spends, etc. Incase you currently do not have a fixed source of income, feel free to prepare for 8-12 month’s worth of expenses. Don’t use this money for high-risk, high-return investments. Keep it in liquid investments like fixed deposits, short-term bonds, ultra-short term debt mutual fund, or digital gold.
The idea is that this fund must give you the peace of mind, while earning enough to beat inflation. Keep track of this fund by checking in annually, or incase of any major change in life situation, like taking care of senior parents, or loans, etc.
5. Get help from a financial expert
Instead of looking for free tips, this is the time to reach out to a professional financial planner who can design a money plan to meet all your future goals. A financial planner, also known as, a Certified Financial Planner, or a Registered Investment Advisor (RIA) works in the best interest of the customer to help them identify how much they need to invest, and in which products, most suitable for their risk profile & preferences. Instead of selling for commissions, these experts will focus on helping you invest across various products like stocks, bonds, gold, new-age investments. They will create plans to help you answer, “How much do I need retire comfortably?” or “Where to invest to ensure my children’s education goals are met?” Book a free 15- minutes call with our team at Womoneysta to get a safe, judgement free space to share your concerns.
Setting up a regular review of your plans will not only start building wealth, but also your much needed financial confidence.
6. Invest in knowledge and education to boost your earning power.
If you’re looking to boost your earning power, it’s important that you invest in yourself. You don’t have to have a degree or be an expert at anything before learning how to invest, manage your money and build skills. There are a number of ways that you can do this:
- Take courses online through sites like Udemy or Coursera where teachers provide free materials for their classes and charge for additional services (like live discussion forums).
- Attend local colleges where instructors often offer their own paid products as part of their coursework.
Divorcing doesn’t have to mean financial hardship for the rest of your life.
Divorcing doesn’t have to mean financial hardship for the rest of your life. It’s true that divorce is expensive and emotionally draining, but it can also be a great opportunity to learn about yourself and your finances.
Divorce is not the end of the world—but it can feel like it at times when you’re trying to adjust after separating from someone who was once part of your life.
Remember that these strategies are baby steps towards your financial freedom. Learn to look out for yourself, learn from your own mistakes and lean on a network of financially smart women, to share your journey with. There is no one-size-fits-all solution, so it’s important to find what works for you and make adjustments based on your needs and circumstances. Good luck!
To speak to our team of financial experts at Womoneysta, a platform providing financial empowerment exclusively to women, run by women – block a FREE CONSULTATION call here