How to Financially Rebound from Divorce

Frustrated woman paying bills

Even the most cordial of uncontested divorces will impact the finances of each ex-spouse. In addition to the loss of your partner’s income, you may also lose retirement benefits or other safety nets that come with being married. By taking several important steps, you will begin to reestablish your financial health and drive it back to pre-divorce levels.

Review Your Retirement Planning

Finances can be tight subsequent to a divorce. Suddenly, you are carrying the monthly expenses on your own. Many divorcees forego allocating funds for retirement in order to meet current expenses. Some even dip into their retirement funds to pay for day-to-day items. This can prove to be a costly error. Reassess your budget, and make adjustments that enable you to continue contributing to retirement accounts, even if it is just a small amount. While a temporary pause in contributions is understandable, you should reestablish the discipline quickly.

In addition, a post-divorce review of your investment portfolio may be in order. Frequently, spouses diversify their assets, but that diversity may need an adjustment once the funds are divided between the individuals.


frustrated woman holding her credit cards

Restore Your Credit

Oftentimes, one spouse may hold the bulk of the credit cards or be the primary borrower on loans. One person may have better credit, which allows for lower interest rates.  In other situations, one spouse may handle the finances while the other spouse handles other household tasks. In either situation, joint debt may be held under one spouse’s name.

If you had a weak credit score or history during the marriage, you will need to improve it post-divorce. At the same time, you will want to proceed with caution and avoid overloading yourself with new debt. You may be able to begin restoring your credit with a starter loan from a credit union or a secured credit card.

Another possibility is to ask your landlord to report your on-time rental payments to the top credit agencies. This can help reestablish a positive credit score apart from your ex-spouse. Rebuilding your FICO score as quickly as possible will start you down the road to financial freedom, and it will help you later when applying for a car loan or mortgage.

Review Your Estate Planning

Your estate plan will need attention following the divorce. You and your spouse may have had a will or trust designating an executor, beneficiaries, and guardians for your minor children if both parents pass away. These designations will most likely change post-divorce. It is critical to update your will in addition to any powers of attorney, trusts, living wills, health care directives, or other estate planning instruments after the divorce.

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