Getting divorced is a lengthy process, in some cases it can last for years. From accepting that your relationship is failing, through to the practicalities of separating and the financial separation, it can be easy to lose sight of what life will be like when it is over. Many people are so caught up in simply ‘getting by’ that starting over after divorce can come with some surprises.

Whenever a couple separates and splits assets, there are financial ramifications. Dividing the wealth of the family to create two comfortable homes for children to live in will mean the tightening of purse-strings for both parents. Add to this the restrictions of living on one income and possible Child Support, and many people feel like they are starting over after divorce with no money.

Being in such a situation can be daunting and the cause of anxiety and worry. It can change the way you live when the little things you took for granted are no longer available to you. You may feel your children will suffer if you can’t afford to buy them the toys/clothes/electronics their friends have. In short, starting over can be life-changing.

However, it is important to remember that your new frugal state is as permanent or temporary as you allow it to be. There are lots of ways to turn around your financial situation if you choose to.

Here are our suggestions on how to start over after divorce with no money.


To rent or to buy

The property you choose to live in will be one of the highest expenses you have. Think carefully about what is best for you financially. It may seem more economical to buy but if you are unsettled about where you want to live, selling and moving soon after will be costly. Renting is a good choice while you save for a respectable deposit for a property purchase and you may be eligible for government rent assistance. Many people like to buy so their children can feel settled in their own home, but make sure you are in the position to make repayments and still have enough left over for bills and general living expenses. There is also the option of sharing a home with another single parent family (look at Share Abode), or even moving back in with family as a temporary measure.

Start saving again

If you are in a financial crisis, saving money is possibly the last thought on your mind. However, the sooner you start saving, the quicker it will add up and you will feel financially buoyant and in-control again. Do your research to find a good savings account with high interest and a no-withdrawal bonus. Add the minimum amount to open the account. If you don’t have this, then sell something on Gumtree or Ebay. Next, work out how much money you can save every week. Cut back on a coffee or cancel a Spotify subscription if you have to. Then set-up an automatic payment for this amount every week into your new savings account. Before you know it, you’ll gave a nice sum of money and the financial stress will fall away. The Barefoot Investor offers some great advice on savings accounts in his book.

Check all your outgoings

Now is the time to make sure you are only spending the bare minimum and that you are getting the best price you can for everything. To do this, check your latest bank statement for your outgoings. Is there anything unnecessary on it? A long-forgotten gym membership or a magazine subscription that you can do without? Cancel any reoccurring outgoings you don’t need but check for cancellation terms first. Also, take an hour to phone around for cheaper utility providers, or phone your current one and ask for a discount. You will be amazed what you can save if you only ask. If you are starting out in a new home, comparison websites such as iSelect will display your cheapest options for electricity etc in your area. We all have outgoings, but keeping any eye on them and making sure they are not a cent over what they need to be is a good money habit for everyone.

Update your insurance

Starting over in after divorce often means health, life and other insurance policies are no longer valid. It may be that by notifying your provider, the policy payments increase as you are no longer in a family unit, but this is preferable to paying into a policy that is invalid and will not pay out should the need arise. As with utility bills, shop around. Insurance companies are keen to keep your business so will work with you to find the best deal. If your budget is tight, make sure you only pay for the insurance that you need. It may be that you don’t need extra’s on your health insurance so take a break and add it back on when you have the money to spend. Warning: Do not scrimp and save by cancelling important insurance policies, just make sure you are getting the best price possible for coverage that you do need

Have an emergency fund

Having some money put aside for an emergency is a shrewd move. If you need a new car part, home maintenance or your health takes a pricey nose-dive, it’s important to be well-positioned to deal with it. Having access to a sum of saved money in an emergency will prevent you from overdrawing your account, if your bank allows this, and paying all the fees that this choice brings. . It can even stop you reaching for an emergency high-interest loan, which you could be paying-off well into the future. Start building an emergency fund as soon as you can. Selling unused items around the home or in the garage is a great way to build it. Do you really need that massage chair? Or could you sell it and have peace of mind for you and your children should a financial emergency hit.

Download our simple guide explaining how we simplify and speed-up your separation

Avoid financial risks 

If you are used to a degree of affluence and are struggling with basic cashflow when starting over after your divorce, you may be tempted to find a quick fix. Going into business with a friend, day trading on the share market or gambling might seem appealing. All too often these tactics can go wrong and are best left for those with the money to spare. If an investment opportunity seems too good to be true, it often is.  If there is a shining offer on the horizon which seems the answer to all your financial problems, make sure you do your due diligence and seek professional advice and guidance, don’t act quickly without advice through desperation. Shares and property purchases are not inherently high risk, but each investment choice must be considered as part of your investments as a whole, ensuring that you have the long term cash flow to fund the investment that you are choosing.  Money is lost when you end up in a position where assets need to be sold, as you can no longer fund them or require the cash to fund your day-to-day expenses, so you want to ensure you are not making decisions that could put you in this position in the future.  Promised financial gains in short time periods come with risk, so do not make such investments unless you can afford to lose the funds invested.  If you don’t have the money for costly mistakes, make sure you talk to an expert before doing anything bold with your limited finances.

Teach your kids about money 

Now is a perfect time to teach your children about money. Explain to them that you are having to watch what you spend and why. You are their role model and if they see you being sensible with cash it will teach them to do the same. If you have to say ‘no’ to new runners or the latest toy/game, get them to save for it by doing odd jobs that save you time and allow you to work more. Ask them to be money savvy around the home. If they leave lights and air-conditioner units on, they are wasting money. If they shower for half an hour it costs you more. Simple habits learnt and used on a daily basis by the whole family will save you money.

Learn to cook (if you can’t already)

Along with your mortgage or rent, one of the biggest weekly household outgoings is grocery shopping. When starting over after divorce, there are lots of ways to keep your grocery bill down but one of the biggest is to buy ingredients and not meals i.e. cook from scratch. Making casseroles, cakes, soups and biscuits is a fraction of the cost of buying cans and packets. Plus, they are healthier and taste a million times nicer. Preparing food in bulk and freezing it not only saves money, but valuable time too. It also means you can cut back on meals out or take-aways which you turn to when you are time poor, instead take a pre-prepared meal from the freezer and it won’t cost you a cent.

Look at your loans

If you have exited your marriage and you are in debt, it can make you feel very behind the game and extremely stressed. The only good debt is a mortgage or tax-deductible debt, provided you have the cash flow to fund such debt. If you have any other debt, it is dangerous. Debt does not only affect your bank account and credit rating (if you do not make the required payments on time), but it can have a detrimental influence on other areas of your life, including your relationships, your happiness and your health. If you have loans and / or debt, book an appointment with a debt expert or a mortgage broker to review your current position and advice you if there is a better way to restructure your debts, saving you money and ensuring you can afford to fund the regular payments required.  If your current debts are overwhelming, a a good expert will not only save you money by consolidation and reduced payments, but they will also provide you with options to get your debt under control, which don’t involve bankruptcy.

Be honest

If your financial situation has taken a significant downturn since starting over after your separation, you may feel ashamed or embarrassed. For some, these feeling are so strong that they continue spending to ‘keep up with Jones’s’. Hiding financial hardship this way will only lead to further distress. Close friends and family will be completely understanding of your new situation and will want to support you if you are honest with them. Explain you are unable to join the dinner out or are skipping a holiday this year as you are re-building your finances after your divorce settlement. There is no shame in it. By cutting back and being honest you will soon be back on your financial feet again.

Posted by Belinda Eldridge
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