Rebuilding Your Finances

Divorce creates two households where there used to be one — and the math is unforgiving. Income that covered one mortgage now needs to cover two rents. Shared expenses become duplicated. Financial decisions you made as a couple now rest on you alone.

🔄 Quick Recall: In the previous lesson, you developed emotional wellbeing strategies and communication tools. Now you’ll build the financial plan that supports your new independence.

Your Post-Divorce Budget

Budget Building Prompt

Help me build a post-divorce budget:

My income:
- Salary/wages: $[amount]/month
- Alimony received: $[amount]/month (for [X] years)
- Child support received: $[amount]/month
- Other income: $[amount]

My new expenses:
- Housing (rent/mortgage): $[amount or "need to determine"]
- Utilities: $[estimate]
- Insurance (health, car, renters/home): $[amount]
- Food: $[estimate]
- Transportation: $[amount]
- Children's expenses: $[estimate]
- Debt payments: $[amount]

Help me:
1. Build a realistic monthly budget with ALL expenses
2. Identify the gap between income and expenses (if any)
3. Suggest areas to reduce spending (prioritize by impact)
4. Create a 3-month emergency fund target
5. Factor in expenses people often forget after divorce
   (new furniture, moving costs, updated legal documents)

Commonly Forgotten Post-Divorce Expenses

✅ Quick Check: Your combined household income was $120,000. After divorce, your individual income is $60,000 — exactly half. Will your living costs be half? (Answer: No. Two households cost significantly more than one. Rent for two apartments > one mortgage. Two sets of utilities > one. Two sets of groceries > one (no bulk savings). Studies show the total cost of maintaining two households is typically 30-40% higher than one. Budget accordingly — your expenses won’t simply halve with your income.)

Separating Financial Accounts

Create a financial separation checklist for my divorce:

Our joint accounts include:
- Bank accounts: [list]
- Credit cards: [list]
- Mortgage: [details]
- Car loans: [details]
- Insurance policies: [list]
- Investments: [list]
- Subscriptions: [list]

For each account, tell me:
1. Steps to close or separate the account
2. Who to contact and what documentation I need
3. Timeline (how long each step takes)
4. Potential issues or pitfalls
5. Priority order (what to do first)

Account separation priority order:

1. Open individual bank account — establish your own account at a new bank before anything else
2. Direct deposit — redirect your paycheck to your individual account
3. Credit cards — close joint cards, open individual card (or secured card)
4. Insurance — health, auto, home/renters in your name
5. Utilities — transfer to the name of whoever stays in the home
6. Beneficiaries — update life insurance, retirement accounts, bank accounts
7. Estate documents — new will, power of attorney, healthcare directive

Building Credit Independently

If your credit history was primarily under your spouse’s name, you may need to establish credit on your own.

Help me build a credit rebuilding plan:

Current credit score: [if known]
Credit history: [strong/limited/damaged]
Joint accounts being closed: [list]
My income: $[amount]

Create a 12-month plan to:
1. Check and dispute any errors on my credit reports
2. Establish credit in my name only
3. Build positive payment history
4. Target a credit score of [goal] within [timeframe]
5. Prepare for major purchases (car, apartment rental, home)

Practice Exercise

1. Build your post-divorce budget using the prompt — what’s the gap between income and expenses?
2. Create your financial separation checklist — which accounts need to be addressed first?
3. Check your credit report at annualcreditreport.com — are there any errors or joint accounts you need to address?

Key Takeaways

• Two households cost 30-40% more than one — don’t assume your expenses will halve when your income does
• Joint debts remain your legal responsibility regardless of what the divorce decree says — close joint accounts and refinance into individual names
• Alimony is a runway to financial independence, not a permanent income source — plan backward from the end date
• Separate financial accounts in priority order: bank accounts and direct deposit first, then credit cards, insurance, and beneficiaries
• Credit rebuilding is predictable: pay on time, keep utilization low, dispute errors, and be patient — 100+ points recovery in 12-18 months is realistic
• Update estate documents (will, beneficiaries, power of attorney) — your ex is probably still listed on everything

Up Next

In the final lesson, you’ll pull everything together into a complete separation plan — a master timeline, checklist, and action document that keeps you organized through every phase of the process.