The top 2 things my clients worry about during divorce are money and children.

A recent study reported that more than 80% of women will be solely responsible for their finances at some point in their lives. The hard truth is that for most women, their standard of living goes down after divorce (estimates range from 25% – 48%).

Does that mean disaster? No way. You CAN take charge of your own future and master your money.

Certainly if you haven’t looked at a bank statement in 20 years, this might take a little getting used to. Building new skills takes a bit of time and effort, but the confidence you gain will be worth it!

Here are 5 basic rules to get you started on the road to being the boss of your financial life.

1. Know where your money comes from and where it goes
2. Spend less than you make
3. Have an emergency fund
4. Understand your net worth
5. Get familiar with your benefits

 

#1 Know Where Your Money Comes From and Where It Goes

If you’re still traumatized from your high school algebra class, I apologize. Figuring this out doesn’t have to be all complicated and doesn’t require an MBA. Your budget just needs to reflect your monthly cash flow.

Where to start?

• Gather 3 months of checking and/or credit card statements.
• Go through and break your expenses into 10-12 main categories.
• Estimate the average you have been making/spending in each category per month – that’s your target.
• Your bank, credit union or credit card company may offer an automated way to categorize spending.
• Track it monthly and adjust your target if necessary.

Click here to get all the worksheets I use with clients to analyze their finances.

#2 Spend Less Than You Make

It’s simple, but not always easy. Especially when you’re going through divorce. Your budget may be tight, but this is the most important time to make sure that your long term financial plan isn’t your Visa card.

 

Here are some basic budget guidelines to help you know if you’re on track:

GOAL	CATEGORY	EXAMPLE EXPENSES
50%	Housing, transportation & food	Rent, mortgage, utilities, car payments and repairs, gasoline, groceries. restaurants
30%	Discretionary	Entertainment, travel, clothing, donations, personal care, health, credit cards, extras
20%	Savings	Emergency fund, retirement, other

Take a look at your monthly expenditures from #1 above and see how you compare. If you see any category out of whack start thinking about steps you can take to bring it back into alignment. That might mean cutting spending somewhere or finding creative ways to increase your income.

 

#3 Have an Emergency Fund

Listen, we all know that sh*t happens. The water heater blows, your old car needs a big repair, or you get downsized at work. If you aren’t prepared, it can derail your entire financial life. I know you see that big fat IRA account sitting there, but taking a distribution from that has big tax implications and jeopardizes your future.

Experts recommend having 3-6 months of living expenses set aside in an emergency fund. Do not delay getting this done. Start with $100, then get to $1,000 and keep socking away that money until you have enough. If you need to, pick up a side gig or temp job to get this funded.

 

#4 Understand Your Net Worth

The difference between what you own (your assets) and what you owe (your liabilities) makes up your personal net worth. Knowing your net worth is important for two reasons:

• It lets you understand your current financial situation.
• It gives you a reference point for measuring progress toward your goals.

List all your assets (home, car, investment accounts, business, personal property, etc…) and estimate the market value of each. Then do the same and list your debts (mortgage, auto loan, credit card, student loan, etc…). Subtract the difference and viola! Now you know your net worth.

Ideally, while you continue to earn and save, your net worth will grow. If your net worth is low or negative, you’ll probably want to work on saving more and spending less.  Recalculate your net worth once or twice a year to track your progress.

 

#5 Get Familiar with Your Benefits

If your employer offers a benefits package, then it’s up to you to find out what’s offered and take full advantage of it. Go ahead and pull out that boring employee handbook you got when you were hired and take a peek.

Here are just a few examples of things to look for:

• Medical, dental and vision insurance
• Retirement plan contribution matching
• Health savings account
• Group life or disability insurance
• Pension plan
• Gym memberships, transportation discounts, tuition reimbursement, adoption assistance

You could be overlooking thousands of dollars by not utilizing your benefits fully. That’s money that could be funding your emergency fund, paying off debt, or saving for your dream vacation.

 

So, what did you learn as a result of reading this? Are you rocking your financial life? If you see room for improvement, that’s wonderful news because now you’re ready to level up.

 

If you could use more help with your finances during or after divorce, I would love to chat. Schedule a Complimentary Consultation and let’s make you the boss of your financial future. Just click here to get direct access to my calendar.

Schedule Your Complimentary Consultation Now

 

And if calculators give you an anxiety attack, then check out my Ditch Your Divorce Fears Financial Planner.

These are the tools, tips, and worksheets I use with clients every day to help them take charge of their financial lives. Whether you’re preparing for divorce, right in the thick of settlement negotiations, or just want to get a handle on your finances, this Starter Pack will put you on the path to success.

 

 

Wishing you strength and wisdom,