Without a doubt, going through a divorce can turn your world upside down. Divorce can wreck havoc on your emotions, your health … and your finances. Going from two incomes to one will certainly affect your monthly household income and perhaps your quality of life. You will be paying all of the bills by yourself with your income alone. While none of that sounds appealing, there is some good news. Thriving financially after divorce is not only possible but its achievable. While it takes some adjustment and some effort, you can regain control of your life and finances and thrive financially. Here are a few tips to thriving financially as a divorced man.
Expect a Lifestyle Change and Adjust your Expectations of Thriving Financially
More often than not, your standard of living will drop for a year or more following a divorce. While it may seem obvious, many people who are going through a divorce do not prepare themselves financially or emotionally for the changes. If you expect and come to terms with how your life may look temporarily after divorce, you can be proactive and remain in control of your post-divorce finances. Try to remember that it isn’t permanent. You’ll be back on your feet and able to regain you previous financial lifestyle again in the future.
Create a Budget and Stick to It
Perhaps you already had a budget when you were married. If so, then you’ll simply need to adjust the numbers. But if you didn’t have to budget as a couple, you’ll need to create a budget now and stick to it. Budgets are a great tool for thriving financially no matter what your marital status, but they are even more important as a single man.
Creating a budget may sound like a daunting task, especially if you have never done one before or if your ex-wife was the keeper of the money in your marriage. But budgets don’t have to be complex. Effective budgets are actually quite simple. They simply balance the money you have coming in each month with how much you spend each month.
The first step is to make a list of all of your income following your divorce. Next, make a list of all of your known expenses (mortage or rent, utility payments, debt, insurance, car note etc). Remember to include items such as alimony and child support in either income or expenses as applicable to your unique situation. After you know how much money is coming in and how much money is leaving each month, you should know exactly how much is left over. The leftover money should be allocated to paying off debt, saving, retirement, your children’s education and entertainment expenses.
After you have your monthly budget created, all you have to do is simply stick to it. Unfortunately, this is often the toughest part. Remember to keep up with your budget each month and adjust as necessary until you find the right fit. Check your budget before making purchases to ensure you aren’t going over in any category.
Be Realistic about the House
When there are two incomes flowing in, you and your ex were able to afford the two story brick home on a cul-de-sac lot. But without her weekly paycheck, is it feasible to stay in the house by yourself? No matter how much you love your home or want to stay there for the kids, it may not be realistic to remain in the home if you want to thrive financially. Take a good hard look at the numbers and make a wise decision on who (if either of you) remain in the family home. It may make more sense to sell or rent the home and live somewhere a little less expensive. No matter how much equity you may have in the house, that equity will not pay the mortgage payment each month.
Pay Down your Debt
Paying off any debt that carried over from your divorce is an important piece of thriving financially as a newly single man. Debt (especially the lines with high interest) can drastically impact your ability to save and spend money. Debt can impact your financial freedom for many years.
If you have debt in your name, make a list of everything you owe along with the interest rate you pay on that line of debt. Look back at your budget to determine if you can cut back in certain areas in order to pay additional money towards your debt each month. Start by paying extra towards the debt with the highest interest rate and working your way down the list until all of your debt is paid off. It may not be as much fun as buying a new boat, but paying off your debt will drastically improve your lifestyle in the future.
Save for Retirement
When you were married, you probably had a good idea of how much you were saving for retired life together. Now that you’ve been through a divorce, it is time to reevaluate how you will fund your retirement without a spouse. Run the numbers yourself or ask a financial planner how much money you should be saving in order to retire at a comfortable level. While money may be tight following a divorce, it is important to put some amount away for retirement. You may have to start small, but even small amounts contributed to a retirement account will build interest over time. Resist the urge to get rid of retirement savings to make living more comfortable right now.
Don’t Make Impulsive Financial Decisions
Divorce can cause a lot of emotions to surface, and we all deal with those emotions a little differently. It is completely acceptable to be emotional, and it is okay to be hurt. It is okay to grieve. When it comes to dealing with these emotions, hold off on making any major financial decisions until you have dealt with the adjustment of being divorced. While it may feel good to switch jobs and move to a new city or purchase an expensive vehicle, big financial decisions such as these can leave your bank account in bad shape.
Instead of making hurried decisions after a divorce (especially those decisions affecting your financial well being), wait it out six to twelve months and make sure those changes are something that you still want.
Rewrite your Will
Although your will may be the last thing on your mind, your will is a financial document and needs to be updated post-divorce. While your goal is thriving financially after a divorce, you don’t want it all to be for nothing if you pass away. Make sure you have the correct beneficiary designated in your will on on your life insurance. You may be the sole support for your children, therefore these updates are critical. Don’t put them off for another day.
A divorced man faces enormous emotional, psychological and financial changes even if he wanted to leave his partner. Divorce brings a lot of change, and thriving financially after a divorce may look a lot different than thriving financially as a married couple. If you are going through a divorce (or considering one), be sure to know your numbers and be proactive financially. If you follow these tips, you should be better prepared for life and money after divorce.