Sometimes, you just need to get out and figure it all out when the dust has settled.
If this is you, you’re not alone. Many women who divorce need to rebuild their financial lives from the ground up, many while supporting children.
In this blog post, we will outline some practical steps for rebuilding your finances, and acknowledge the unique challenges women face when starting over after a divorce.
If you’re still married and trying to figure out how to divorce when you have no money, we’ve got you covered.
- Starting over after divorce includes both rebuilding your finances so you can support yourself, but also enforcing the terms of your separation agreement.
- Many women have no money to divorce and are starting from scratch – a strong support network is key to keep you safe and informed
- After divorce finances initially seem grim, but financial independence is possible for single women and financial situations can improve with time.
First, Build a support system
A strong support system is essential for getting through tough times. If you do not have family or friends you can rely on, there are plenty of divorce support groups, in person, online and through local and community groups. Find one that feels right for you and lean on them for help and advice.
Give yourself some space to grieve the end of your marriage. This is a major life change, and it is okay to feel about it however you feel and for those feelings to become a distraction. You have to deal with them to truly move on.
Gain clarity on your financial situation
Women who divorce face unique issues that can make divorce with no money more difficult. This can include things like:
Set up bank accounts in your own name
Increasingly, millennials have their own financial accounts and credit cards (all separate, in their own name), but many women leave a marriage with just a brand new bank account they created in a hurry. Here are the basic accounts you need:
- Checking account: This is a must for paying bills and managing your daily finances.
- Savings accounts: Open separate (free) accounts for different reasons to save money: your emergency fund, long-term goals and short-term goals.
- A child expenses checking account: if you receive child support or share some kid costs with your former spouse, open a separate account for that money. His monthly payment and your contributions can both go in there, and you should only use it for child-related expenses (childcare, education, camp, the kids’ insurance premiums). This can make accounting easier if you need to renegotiate your support agreement and help you qualify for the Childcare Tax Credit and other tax breaks for single parents.
- A tax account: if you are self-employed or doing gig work, open a separate account for taxes so you’re not tempted to spend that money. Federal and state income taxes are not taken out of your earnings, so you will need to set some money aside each month.
- A retirement account: Even if you can’t afford to contribute much at first, it’s important to start saving for retirement as soon as possible. The most powerful investment is time and your financial future is worth it. Even if you expect a future pension.
If you now own any bank accounts that used to be joint accounts, it’s a good idea to check your beneficiaries (who gets the funds if you die). Beneficiary designations OVERRIDE a will or probate court, so are very important to keep updated.
Enforce a Divorce Settlement
It’s one thing to build a divorce financial checklist, go through the divorce process and get awarded a settlement, and another thing entirely to enforce it. If your ex-husband is not paying what he’s supposed to, you may have to go back to court to get the courts to enforce the terms of your settlement. The good news is divorce settlements are protected from bankruptcy.
The bad news is it can be a costly and time-consuming process and may come with a lot of tradeoffs in terms of other things you could be spending time on, or how you want to use any remaining goodwill.
My mother had to take my father to court to enforce her divorce agreement, after years of not receiving child support and other payments owed to her. The process took years and was expensive.
How to enforce a divorce settlement if your ex isn’t paying
If you’re owed money from a divorce settlement, and your ex isn’t paying, there are a few things you can do to try to get the money you’re owed.
You can file a motion for contempt with the court that issued the original order. This basically means that you’re asking the court to find that your ex violates the court order, and to take action to make them comply.
The court can then order your ex to pay what they owe you, plus interest and possibly other penalties. The court can also order wage garnishment, which means that money would be taken directly out of your ex’s paycheck to pay you what they owe.
If you did not have a divorce lawyer during your divorce proceedings, this is a great time to reach out to a local legal aid group. This kind of court order is the perfect thing to get their help with.
Try to work out a new plan with your ex
You can also try to work out a payment plan with your ex, outside of court. This might be easier said than done, but it’s worth a try. Sometimes just having a conversation and coming to an agreement on how and when the money will be paid can make a big difference.
If you’re able to come to an agreement, you can then ask the court to issue a new order reflecting the terms of your agreement.
Keep in mind that even if you do get a court order or reach an agreement with your ex, there’s no guarantee that they’ll actually follow through and pay you what they owe. But it’s worth taking these steps to try to get the money you’re owed.
Account for child or spousal support
When people divorce, sometimes one parent has to provide financial support to the other parent to cover costs associated with the kids. Similarly, one person may have to pay alimony to their ex-spouse. Women are more likely to be the recipients of these payments.
In addition to actually getting the money, women may have to document childcare costs or do other admin to justify the payments.
Recover from Financial Abuse
Financial abuse is a form of domestic violence where one partner controls all the finances in the relationship. This can make it difficult to get a handle on your finances and may leave you with little to no money after divorce.
The most long-term effects are identity theft and credit card fraud. If your ex-spouse ruined your credit, you might have a difficult time getting a loan or renting an apartment. It can also take time and quite a bit of effort to recover from them.
Strengthen your credit score and work down debt balances
Start by getting a copy of your credit report and score. You’re entitled to one free credit report from each of the three major credit bureaus every year. Review your report for any errors or potential signs of fraud. If you find anything, dispute it with the credit bureau. This is also a good time to lock your accounts and identity.
Then, focus on paying down your debt balances and increasing your credit score. You can do this by making all your payments on time, keeping your credit utilization low, and using a mix of different types of credit.
It might take some time to improve your credit score, but it’s worth the effort. A good credit score will make it easier to get approved for loans and get a better interest rate.
What if you lost health insurance?
If you had health insurance through your ex-spouse or their employer, you might have lost it when you divorced. It *is* possible to get cheap health insurance for single mothers.
How to get COBRA After Divorce?
The first thing you should do is see if you qualify for COBRA. This is a program that allows you to continue your health insurance coverage for a limited time after divorce, through your ex’s employer’s health care plan. Contact the health insurance provider you had when you were married for help.
How to Get Medicaid or CHIP after divorce?
If you don’t qualify for COBRA or can’t afford the premiums, you might be eligible for Medicaid or a state program. Medicaid is a federal and state program that (along with CHIP, the Children’s Health Insurance Program) helps people get health insurance. Over 72.5 million Americans use this program, which includes children, pregnant women, parents, seniors, and individuals with disabilities. Medicaid is the biggest health insurance program in the United States.
Medicaid and CHIP are administered at the state level, so you’ll need to check with your state’s program to see if you qualify and how to apply.
How to Get a Health Care Marketplace Plan After Divorce?
If you don’t qualify for COBRA, Medicaid, or a state program, you can get an individual health care plan through the ACA marketplace at Healthcare.gov. You can do this at any time if you have a qualifying life event, like getting divorced.
When you apply for a marketplace plan, you’ll need to provide information about your annual or monthly income and household size. You’ll also need to create an account with the marketplace and fill out an application. Depending on your state, you might be able to apply online, by phone, or in person.
You might qualify for a subsidy if you have a lower income, which will give you help to pay for your premiums. You can also find out if you qualify for Medicaid or CHIP through the marketplace.
Rebuilding savings and retirement funds
When you start over after a divorce, you might have to rebuild your savings and retirement accounts. This can be a big financial issue, especially if you are now living on a more limited income.
Build an emergency fund
A lot of women leave marriages with nothing. Like grab the kids and go divorces. The place to restart is basic financial stability: an emergency fund.
If you don’t have one already, start building an emergency fund. I have my own definition of emergency fund. This account is for unexpected expenses, like medical emergencies and job loss.
Start sinking funds for irregular expenses
Sinking funds are for expenses like car repairs and insurance premiums, that can present problems, but don’t really meet the definition of unexpected expenses. these are large, annual, or semi-annual payments that can strain the budget if you’re not prepared for them.
Break irregular expenses into monthly or weekly payments and have the money withdrawn from your checking account into a separate savings account. When the bill comes due, you’ll already have the money already saved.
Start saving for retirement
If you left your marriage with a retirement account, you might want to consider rolling it over into an IRA. I recommend you keep this separate from your other retirements account until the dust has settled.
If you don’t have a retirement account, now is the time to start one!
You can open an IRA at most banks and brokerage firms. If your employer offers a retirement savings plan, like a 401k, you should start contributing to that as well.
Social Security for Divorced Women
Women tend to receive lower social security payments at retirement. This is due to a number of reasons. Women are more likely to take time out of the workforce to care for children or aging parents. Women are more likely to work in lower-paying jobs. All this limits our ability to max out our contribution to social security, and the problem is compounded for women of color.
If you’re divorced and were married for at least 10 years, you might be able to get Social Security benefits based on your ex-husband’s work record. Learn more about ex-spouse benefits at SSA.gov. It’s a decision you can delay until you are 61. You might be in a new relationship or not even be a single person anymore!
Grow and diversify your income
The best answer to “how to start over after divorce with no money?” is “increase your income.” But while that is true, it can be especially hard for women who have been out of the workforce for a while, who are juggling kids and coparenting, and rebuilding their lives.
Any paying job can be a good job
To start with, any paying job that allows you to survive financially and accommodates your logistical needs is a good place to start if you have been out of the workforce. Getting a new job can be super scary (even with part time jobs) but remember where you start is not where you will end up.
Diversify your income with a side hustle
You might want to consider starting a side hustle or three. A side hustle can be anything from selling handmade jewelry on Etsy to becoming an Instacart shopper. I had a tax client this year who gigged his way to financial stability as an Instacart shopper after financial abuse from his ex-husband left him without a dime.
Sell stuff to make a little income
Garage sales can be disruptive to kids who may attach security to stuff after a divorce. But, if its available to you, Mom’s groups, local Facebook groups, local swaps and sidewalk sales can help raise a little cash with your unwanted items. It can also help you get rid of crap that reminds you of your husband.
Work toward a raise or a new job with higher pay
Sometimes the best place to build your new life and higher income is at your day job. There are lots of free or low-cost online courses available to help you transition into a higher paying job, but start with a conversation with your manager. Mention you are now the sole provider for your household, are interested in moving into roles with higher earnings and would love their guidance and support. If they aren’t receptive to that, start looking for better employment elsewhere.
Manage new expenses carefully
After a divorce, you might have to manage new one-time or monthly expenses. This can include things like child care, alimony, and legal fees. Often in divorce, expenses stay high or go higher, while you don’t have as much money to work with.
The best way to do this is with a budget method that works for you and some cash flow management tools. The Budgenista has a great One Week Budget or you can use The Organized Money’s planner-based budget method.
You can also use budget apps like YNAB to keep track of your expenses and income. This can help you find ways to cut back on expenses, so you have more money available each month for sinking funds and savings.
Should you talk to a certified divorce financial analyst?
CDFAs or Certified divorce financial analysts specialize in divorce cases. They work with your divorce attorneys and tax advisors and review your divorce case to be sure it’s a fair deal. They can also offer guidance on how to best manage your finances during and after the divorce, like other financial advisors.
However, if you are trying to figure out how to start over after divorce with no money, they are probably out of budget.
No worries! You can still join their communities, read their blogs, and find out free or low-cost resources they offer to help you get started on your financial journey. Unless you have very complex assets or are relatively wealthy, focus on their free content.
Deal with Family Members After Divorce
After your divorce, you have reshaped your family, even if you don’t have kids. If you have kids, they are going to have to get used to a new dynamic, and possibly a new family home.
This can be a time when a family member may want to be more involved in your children’s lives. It can also be a time when family members start taking sides or trying to insert themselves into the creation of your new life.
Set boundaries with family members as needed, especially if you were financially entangled with them before, and try to hold the line.
Build a Life After Divorce
Financial stability is worth a lot of heartache, but you do not need a lot of money to have a good life. Make a list of the things that are important to you and work on incorporating them into your life, one by one.
For example, if you love to travel, start planning weekend getaways or road trips you can take with your kids. If you need time with your girlfriends, have them over for frozen burritos and cheap wine. Like a support group. With burritos.
You can also look for free or low-cost ways to enjoy the things you love. Some of my happiest memories as the daughter of a single mom are summer programs at the local library.
Financial Independence for Women
For many women, starting over after a divorce means getting comfortable with financial independence for the first time. Becoming a financially powerful woman can be a challenge, especially if you are not used to managing your finances or do not have enough money.
Each of these financial problems can be overwhelming on its own. But when you are dealing with all of them at once, it can feel like you are drowning.
It is important to understand that you are not alone. Many women go through divorce and come out the other side stronger and more financially stable than ever before. You can do this, too.