One side effect of a struggling economy is that the divorce rate declines. When the economy recovers, so,too, does the rate at which people end their marriages. Why? Because it is an expensive process. As Mark Zandi, chief economist at Moody’s Analytics, says, “Divorce generally results in a significant financial setback for all those involved.” The key to gaining control of your finances after divorce: planning and preparation. Start by avoiding these five big mistakes.


  • Spending as Usual. The reality is that, for most of us, income will be significantly changed as a marriage ends. Even if both spouses work, they must support a household and life on their own now. Spending as normal is untenable – at least until you determine your new “normal.” Now is the time to practice restraint.
  • Finances after divorce | Divorce HelperFighting for the Family Home. Can you really afford your home – and taxes, insurance, upkeep, utilities, etc. – on your own? Many experts advise against accepting the house in lieu of alimony. Yes, the house can be an asset, but unless you are fully able to support it on your own, it can just as easily become a liability. If you can get the house and alimony, consider selling the home – or at least saving the alimony as a liquid asset instead of using it to pay off the house.
  • Failing to Save. If you do receive alimony, save it. Try to put away 10% of your monthly alimony payment and/or income in order to build an emergency fund. If that’s too much, start with 5%, 2% even. But stick with it each month, and add more when you can (e.g. bonuses, tax refunds, etc.).
  • Forgetting about Taxes. Watch out for hidden risks in the division of assets. Say you and your ex-spouse had two accounts with $200,000 each in them. On paper, you each  get one. But what if you get the tax deferred account, while your spouse takes over the after-tax investment account? Your spouse gets $200,000, while your account’s value is greatly diminished by taxes. Don’t start thinking about money after divorce – plan ahead.
  • Lowballing Your Expenses. Think about your living expenses, sure, but don’t stop there. If you have children, what about schooling, transportation, childcare, athletics, camps, clothing, and other miscellaneous items? If you had health insurance with your spouse, what happens to your plan now that you’re single? How much do you spend on food for your family? There are expenses you can cut if you must, but when projecting your finances, be aggressive and proactive.


The best way to control finances after divorce is to start planning before and as you go through the proceedings. If you wait until the ink is dry on the papers, you may not be putting yourself in the most advantageous position possible. Seek help: a good financial planner or advisor can help you build a more secure future.

Finances after Divorce | Divorce Helper

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