Not everyone who says “I do” goes on to live happily ever after. Studies show that almost 50 percent of U.S. marriages end in divorce. The rate is even higher for those who choose to remarry. Going through a divorce can leave your finances in shambles. Especially if you stayed at home while your spouse worked. Here’s the blueprint for rebuilding your finances after divorce.
Untangle the finances
Traditionally, when couples get married they merge their finances and open joint accounts. Now that the relationship has ended, you need to cut ties financially. The first step to rebuilding your finances after divorce is separating bank accounts, credit cards, car loans and anything else that was in both names. You don’t want to be responsible for any debt your ex racks up once you choose to part ways. Review your joint accounts and have them closed or transferred to the appropriate person’s name. While you’re at it, don’t forget to update your beneficiary information. If you’re not on good terms, there’s no sense in them getting your money when you croak.
Cover your basic necessities
When it feels like your entire world has crumbled, it can be hard to decide which pieces to pick up first. A lot of people don’t think straight when their emotions are running high. They’re so caught up in how they feel that they run out and do things they end up regretting later. Play it safe for now and just cover the basics. You need a roof over your head, food on the table, clothes on your back and a way to get to work. Everything else you can figure out over time.
Create a financial plan
Once the smoke clears and you see which accounts and debts belong to you, start working on a budget. You’ll need to create two lists; one for your income, the other for your expenses. Now that you’re going from two incomes to one, you probably won’t be able to afford your old lifestyle anymore. If you’ve done the math and this proves true, it’s time to downsize and start cutting unnecessary expenses. Depending on how large the gap is you may need to find a better paying job or work a side gig. If you crunch the numbers and have money to spare, use the extra funds to build your savings or pay off debt.
Note: Even though your ex may be required to pay alimony and/or child support, you don’t want to rely solely on their income. If they decide not to pay because of financial troubles or out of spite, you’ll be screwed.
Start saving consistently
Everyone needs to have at least six months of living expenses tucked away for a rainy day. The best way to build your savings fast is to pay yourself first. There are two ways this can be done. You can have your employer direct deposit your pay into two separate accounts. A certain percentage can be deposited into your savings and the rest will go into your checking account as usual. The other option is to setup automatic transfers with your bank. In both cases, the key is to keep your hands off the money. Just let it sit there until you really need it.
Check your credit
Now that your financial situation has changed, it’s a good idea to check your credit. You need to know where you stand so you can start the rebuilding process. You’re entitled to a free copy of your credit report once a year from Equifax, Experian and TransUnion. FYI, joint accounts will still show up on your credit report unless you close or separate the account. It’s not enough to just say who owes what. If your ex decides not to pay their debt but both names are on the account, both of your credit scores will suffer.
Report any name changes
Once the divorce has been finalized, some people decide to go back to their maiden name. Those who choose to do so must inform the proper authorities of the change. Most important is the Social Security Administration for a new Social Security card. If you don’t let them know, you’re going to have a hard time when you try to do your taxes. The name on your tax return must match what the SSA has on file, otherwise they won’t accept it. From there, you need to go the DMV for a new license, title and registration. Next, you’ll want to notify:
- Voter registration
- State department for an updated passport
- Your employer and professional organizations
There are more people you’ll need to inform along the way but these are the big ones.
Save for retirement
As part of the divorce agreement, your former spouse may be required to split their retirement assets. In that case, you’re already ahead of the game. Not everyone is so lucky though. You may need to open your own retirement account. You can opt for an IRA or take advantage of an employer-sponsored plan like a 401K. Go with the latter if your employer offers to match a portion of your contributions. Then contribute enough to reap the full benefit. It’s free money so you’d be wise not to turn it down.
Frequently Asked Questions
What financial steps should I take immediately after a divorce?
Start by updating your budget, separating joint accounts, reviewing your credit report, and making sure all bills are in the correct name. These steps help stabilize your finances quickly.
How do I rebuild my credit after divorce?
Pay all bills on time, reduce credit card balances, dispute errors on your credit report, and avoid opening too many new accounts at once. Consistency is key to improving your score.
Should I close joint accounts after a divorce?
Yes. Closing or converting joint accounts prevents future financial entanglements and protects you from being responsible for your ex‑spouse’s spending.
How do I create a new budget after divorce?
List your new income, essential expenses, and debt payments. Adjust for any changes in housing, childcare, or insurance costs. A realistic budget helps you regain control.
What happens to shared debt after divorce?
Even if a divorce decree assigns debt to one person, creditors may still hold both parties responsible. It’s important to refinance, transfer balances, or close accounts to protect yourself.
How can I build an emergency fund after divorce?
Start small, aim for $500, then work toward 3–6 months of expenses. Automate contributions to make saving easier.
Do I need to update my beneficiaries after divorce?
Yes. Update beneficiaries on life insurance, retirement accounts, and investment accounts to ensure your assets go to the right people.
How do I manage taxes after divorce?
Your filing status may change to “single” or “head of household.” You may also need to update your W‑4, understand who can claim dependents, and adjust for alimony or child support rules.
Can I buy a house after divorce?
Yes, but lenders will look closely at your income, debt‑to‑income ratio, and credit score. Rebuilding credit and stabilizing your budget can help you qualify.
Should I work with a financial advisor after divorce?
A financial advisor can help you create a long‑term plan, manage investments, and rebuild wealth, especially if your financial situation changed significantly.
How long does it take to rebuild finances after divorce?
It varies, but many people see progress within 6–12 months with consistent budgeting, saving, and credit rebuilding habits.
Can I file my taxes online while rebuilding my finances after divorce?
Yes. Filing online with a service like ezTaxReturn is one of the easiest ways to stay organized and avoid costly mistakes during a major life transition. You can prepare your return at your own pace, get step‑by‑step guidance, and receive your refund as quickly as possible—all of which can help you regain financial stability faster
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
