Maybe you grew up like I did – where you were never taught anything about money and finances. Or maybe math was hard, and you left all that numbers stuff to someone else. But if you’re in the process of divorcing, or if you’re on your own after divorce, you need to get a handle on your finances – like it or not.
The good news is: You can do it! And not only that, but taking control of your money will improve your confidence, not to mention how it can improve your lifestyle over time.
The challenge is knowing where to start. There are oodles of resources available to help you, no matter what your situation. Many are free and as close as your public library or an Internet search. In fact, there’s so much information out there – much of it contradictory or conflicting – that it can be overwhelming just trying to get started.
For those divorced moms who don’t know much of anything about finances, this article describes the basics. Additional resources are listed at the end of this article to help you take the next steps whether you’re a newbie to money management or a divorced mom looking for specific financial information. And no matter what your specific financial needs, most of us could improve our financial well-being. You can download a copy of “7 Practices for Financial Well-being after Divorce,” for free here; this guide offers tips and guidance to help you find peace of mind around your financial situation.
To keep things simple, let’s start with three basic questions. If you don’t know the answers to these questions, you’ll want to find out so you have a solid starting point going forward.
- What money and other assets do you have?
- How much money do you receive each month (or each year), and where is it kept?
- How much money do you spend each month (or each year), and how do you make those payments?
What money and other assets do you have?
If you’re in the process of divorcing or recently divorced, you might find the answer to this question on your financial statement. If not, you’ll want to create a simple list for yourself. On the list, include items such as:
- Checking accounts and current balances (the amount you have in the account, which should be shown on your most recent bank statement or online inquiry)
- Savings accounts and current balances
- Property you own (like a home or a car) and how much it is worth (less anything you owe, like a mortgage), including assets you can sell like your diamond engagement ring
- Retirement accounts and balances
- Trust funds, investment accounts, and other assets (if you don’t know what these are, don’t worry about them for now)
This list is the money you have to start with. Don’t worry if it doesn’t seem like a lot; most divorcing women take a step or two backward financially as they adjust to life after divorce, but you won’t be stuck here for long as you learn more about money and take control of your finances.
How much money do you receive each month, and where is it?
This question is basically asking how much money you make each pay period or month if you are working outside the home. You can also include any spousal maintenance you will receive as well as child support you can reasonably expect to get. Unless you have a lot of money on your list from Question one, the amount of money coming in each month will dictate your short term spending and choices as you begin to learn how to manage your finances.
Make a list of the sources of your income and the amounts you will receive. You should also make note of where the money is kept, such as a paycheck that is direct deposited into your checking account, or a handwritten check for child support that you deposit at the bank. For your paycheck, for now just note the net pay (how much you take home). Later you can look at how much money is coming out for taxes, retirement plans, health insurance and other deductions.
How much money do you spend each month, and how do you make those payments?
This question is usually the hardest for most divorced moms, although you may have worked with your attorney or a divorce financial advisor to estimate your monthly expenses as part of your divorce settlement. Here you will want to list all the things you have to pay for each month, like rent or mortgage payments, car payments, utilities, groceries, gas, clothes, babysitting, etc.
The key here is to make sure you spend less than you make. It sounds simple, but it’s not always easy to do, especially as you adjust to a new lifestyle after divorce.
If you haven’t opened your own checking accounts, gotten a credit card in your own name, or refinanced your assets like your house or car in your name, those would be good first steps.
Additional Resources for Basic Financial Information
A couple of resources I’ve found to be particularly helpful at low or no cost are:
- Suze Orman’s book “Women & Money, Owning the Power to Control Your Destiny.” I included this book in my list of 10 Books to Give Your Friend Going Through a Divorce (article and more description here)
- CNN Money Essentials, a free series of articles you can read online for free here
- Udemy, the online classroom, has a basic money management course based on some free guides (that you can download and read on your own) put together by the MoneySENSE-Singapore Polytechnic Institute for Financial Literacy. Find out more or sign up for the course here.
Beyond the Basics – What’s Next?
If you need more help, classes (online or live classroom instruction) can be beneficial. Your church or community center may offer financial literacy classes at low cost. Many divorced moms have found Dave Ramsey’s approach helpful. His Financial Peace University is available online or in most major cities. (Find out more about here.) There are additional options and descriptions in the Financial Well-being Guide I introduced above as well (get your copy here).
If you are looking for help on specific topics like whether or not you should stay in your marital home or how to pay for college for your kids, search for articles on www.divorcedmoms.com and on the Internet, but use your judgment about what you read since not everyone posting information is an expert!
To stay up to date on financial topics, I recommend you subscribe to one of two magazines: Money Magazine (information here with subscription link at the bottom right) or Kiplinger’s Personal Finance (website here with a link to the magazine subscription at the bottom of the page). You can also read many articles online. Both magazines address a variety of financial topics and include stories and examples of people from all walks of life and in various financial circumstances. You can ignore the investment sections for now.
One final tip: If your children are old enough, involve them in your learning. You'll have more fun, and you'll all benefit from taking control of your financial future.
How have you made changes to your post-divorce financial picture?
photo credit: 401(K) 2013 via photopin cc