Financial Steps After a Divorce

A: Divorce can be difficult on many levels, and one of the most formidable challenges for most is the financial strain it causes. Making sense of your finances after a divorce takes work and time, but with proper planning and a responsible approach, it can be done.

Here are 10 financial steps to take after a divorce:

1. Close all joint accounts

If you haven’t already taken this step, do so immediately. Review all your financial accounts and credit cards. Then close all the ones that are jointly owned by you and your ex-spouse. In the best-case scenario, failure to take this step can leave your accounts open to fines and maintenance charges for accounts you don’t really use. In the worst-case scenario, your ex-spouse can rack up huge bills on a shared credit card or leave a shared checking account in the red. This can leave you to pick up the tab or risk ruining your credit score and financial health.

2. Change beneficiaries on your savings and retirement accounts

This step is equally important and is also often forgotten about by divorced individuals until it’s too late. Neglecting to change the beneficiaries on your accounts after a divorce can mean your ex-spouse ends up inheriting your IRA, 401(k) or another savings account after you pass away. Changing the beneficiaries on each relevant account can be done quickly and easily with a single form. Look for the designation of “primary beneficiary” and “contingent beneficiary” on each account’s form and list your choice.

3. Review your living trust and make any necessary changes

Don’t wait to review your living trust and estate plan or you may never make the necessary changes. Speak to your attorney for guidance. If your ex-spouse is the one who primarily dealt with the attorney and you’re looking for a new start, you can ask friends and family to recommend a new attorney you can use.

4. Open new accounts

Once the divorce is finalized, you’ll want to open new accounts with your name exclusively listed as the owner. This includes credit cards, checking and savings accounts. Once you have new credit cards in your name, take steps to build up your credit quickly, like making regular, small purchases on your cards and paying the balance in full each month.

5. Update your insurance coverage

You don’t want to get stuck paying for coverage you don’t use — or worse, get stuck with no coverage at all. Review all your insurance policies, including life, health, auto and homeowner’s insurance, then change any plans that were shared with your ex-spouse. Pay particular attention to assets you may have listed in your homeowner’s policy as you may not own all of them any longer and each asset can increase your premium. Now that you are on your own, you may also want to consider taking out a disability insurance policy. This policy will provide you with the monthly equivalent of a paycheck if you become injured and are unable to work for an extended period of time.

6. Build an emergency fund

Divorce is often expensive, and you may have wiped your savings clean after splitting up with your ex. Now that you are single again, it’s more important than ever to have a safety net that can tide you over in case of an emergency. You can open a new savings account at for just this purpose and save aggressively until you have enough to cover three to six months’ worth of expenses.

7. Adjust your budget to fit your new financial situation

You may have lost one stream of income in the divorce, but your everyday expenses will likely be considerably lower. On the other hand, you may have new expenses to cover, such as alimony and child support. Take the time to sit down and determine how your income and expenses have changed after the divorce. Then adjust your budget accordingly.

8. Update all legal documents and records

If you’ve changed your legal name during the divorce, be sure to change the name of record on all your legal documents and accounts, including your driver’s license and Social Security number. You can contact your local DMV and the Social Security Administration for assistance.

9. Purchase a new safe and shredder

If your ex walked away from the divorce with the safe and shredder, be sure to replace them as quickly as possible. A home safe is the best place to keep valuables and important documents. Shredding any documents containing sensitive information that you no longer need is an important part of protecting yourself from identity thieves.

10. Analyze your investments

If your ex-spouse handled all the investing in your marriage, you’ll need to analyze your investments and create a new portfolio that fits your own investment style and needs. Consider working with an investment advisor for guidance.

Getting divorced can spell disaster for your finances, but it doesn’t have to be that way. By taking the steps outlined here you can keep your financial independence after a divorce.

Your Turn: Which financial steps have you taken after a divorce? Tell us about it in the comments.