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14 Financial Impacts of Divorce and How You Can Plan a Secure Future

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By Alessia Barranca

Frugal Feature, Lifestyle

Published on

Divorce is one of the most traumatic events that a person can go through. Aside from the emotional turmoil involved, getting divorced can also significantly impact your finances. We take a look at 14 financial impacts of getting divorced and how you can plan for a secure future:

Division of Assets and Debts

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Marital assets like property, investments, and bank accounts must be divided fairly. An attorney will usually help couples negotiate settlements, which can involve selling assets or refinancing to keep both parties happy. You should also talk through any existing debts and allocate them sufficiently. Any lasting debt can impact your credit score and future borrowing ability.

Spousal Support

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Depending on the circumstances, spousal support, also known as alimony, might be awarded to one spouse for financial assistance. The figure will depend on the allocation of assets and how much income the partner paying support gets each month.

Child Support

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If children are involved in the divorce, child support payments are determined by court order to ensure their financial well-being. Instead of a one-off payment, child support is an ongoing expense that needs to be factored into your monthly budget if you are the one paying out. 

Increased Living Expenses

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Whether you keep the family home or move somewhere new, you must adapt to living alone. This can mean suddenly facing expenses you previously shared with your spouse. Your monthly outgoings are likely to increase from rent and utilities to groceries and subscriptions. 

Legal and Court Costs

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Divorce lawyers and court fees can quickly add up and should be factored into any financial planning. Mediation costs are also significant, so the sooner you agree on a settlement of assets, the better. Be careful not to settle out of court. What you agree on at the time may not be the best for you in years to come. When pensions and investments are added to the mix, working out a settlement can become complicated, so hiring an attorney is always advised. 

Tax Implications

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Dividing marital assets, spousal support payments and the dependency status of children can all affect your tax bill. You should consult a tax advisor to understand the potential tax consequences once your divorce has settled. 

Insurance Changes

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When you divorce, you’ll likely need to review your insurance to make sure you’re covered. You may need to take out separate car insurance, health insurance, and homeowner’s or renter’s insurance policies, which may be higher than your combined insurances while you were married.  

Credit Score Changes

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Divorce can negatively impact your credit score if you have joint accounts, shared loans, and other debts. You’ll need to establish separate credit in your name and be patient as your score gradually increases. This can take a long time if you don’t have a strong credit history, so you may be unable to take out new credit. 

Retirement Funds

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You will have been planning on retiring with your spouse, so your savings and pension plans will be centered around these plans. You must review retirement accounts during asset allocation and make a new plan.

Emergency Savings

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The emotional and financial strain of divorce can quickly deplete your emergency savings. Once the divorce is settled, you should look to rebuild a safety net so that you have a cushion for when you face financial bumps in the road in the future.

Lifestyle Changes

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The lifestyle you were used to when married may change when you divorce, depending on how much disposable income you have. This could mean downsizing to afford rent on one income, driving a smaller car, or taking fewer vacations until you get used to living alone.

Depending on Others

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Some divorcees move in with a friend or a family member until the dust settles on their separation. Leaning on others for support can give you time to save for a deposit on a home and build up a healthier bank account. 


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You will need to learn fast if you have never budgeted while married or your spouse took care of finances. Keeping track of your incomings and outgoings will help you stabilize your finances and stop overspending while adjusting to your new income. 

Investing in The Future

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Once all assets have been divided and you are in a pattern of paying bills and adjusting your lifestyle, it’s time to look to the future. Consider your long-term goals beyond basic needs. These could include buying a house, saving for your children’s education, or traveling in retirement. To catch up, maximize contributions to your retirement plan (401(k) or IRA) if possible and increase savings from your salary.