If you’ve found your way here, chances are, you’re a single mom, freshly divorced or in the process, and you might have more questions than answers. Especially when it comes to money.
“What immediate changes am I going to have to make financially?”
“How am I supposed to pay for my children’s education and also pay for day-to-day expenses?”
“What about insurance?”
As a financial advisor and CDFA (Certified Divorce Financial Analyst), I help women make informed financial decisions throughout divorce and single parenthood. My goal is for you to begin this journey with confidence and to know that there is support to guide you during every step of the process.
Here, we’ll discuss a few important tips that can help you in the days ahead.
#1: Immediate Financial Adjustments
The transition into single parenthood after divorce necessitates immediate financial changes. Here are some important things to consider:
Don’t Pay Off Debt Immediately
You’re looking at a credit card statement and immediately have the urge to pay it off. Don’t. It’s important to have liquidity–you need cash you can access easily.
Emergency Fund
Be prepared for when life happens because it inevitably does. Pay minimums on credit cards until you have saved at least 3 months worth of living expenses.
Keep Saving
Begin putting 20% of your income into a savings account. Aim to save between 6-12 months of your current income.
#2: Planning For Your Children’s Education
Many single mothers worry about saving for their children’s education while covering their daily expenses. Here are some effective ways to plan ahead:
Start Early
The earlier you begin saving for your children’s education, the more time your investments have to grow. Consider opening a 529 college savings plan, a tax-advantaged account designed for education expenses. Use this money to pay for tuition and other school-related costs.
Keep Money Liquid
Although 529 accounts are beneficial, be sure to keep some money liquid, so that you can access it easily–remember, life happens.
#3: Housing
Evaluate Your Budget
Determine how much you can comfortably spend on housing without jeopardizing your other financial priorities.
Keep Children In the Same School District
Divorce is hard enough on you–it can be even harder on your children. Keeping them in the same school district, helps them maintain their lifestyle as much as possible.
Work with a CDLP
A CDLP (Certified Divorce Lending Professional), is specifically trained to help individuals undergoing divorce. They can assess whether it’s feasible to keep or refinance the family home and offer valuable guidance on mortgage-related matters throughout and after the divorce process.
#4: Importance of Insurance
Including life and disability insurance clauses in a divorce agreement can be important for various reasons.
Financial Protection for Children and Dependents
Life insurance can ensure that financial support continues in the event of the death of you or your former spouse. The policy’s proceeds can be designated to cover child support, education expenses, and other financial obligations.
Alimony and Spousal Support
Life insurance can be used to secure alimony or spousal support payments. If the paying spouse passes away, the life insurance policy can serve as a source of income for the receiving spouse, ensuring their financial well-being.
Disability Protection
Disability insurance clauses can be equally important. In the event that one of the divorced parties becomes disabled and unable to work, disability insurance can provide income replacement, ensuring that financial responsibilities, such as child support or alimony, can still be met.
#5: Accessing Financial Guidance & Support
Working with someone who isn’t well-versed in divorce could cost you. Seek a financial advisor who specializes in helping single parents. They can provide tailored advice to navigate your unique financial situation–keeping what’s best for you and your children in mind.
#6: Staying Motivated & Confident
Staying motivated and confident as you begin the new journey of single parenting is essential.
Set Goals
Establish clear financial goals, both short-term and long-term. Having specific objectives can help you stay focused and motivated.
Celebrate Small Wins
Embrace the fact that you are in complete control of your financial situation. Acknowledge and celebrate your financial achievements no matter how small they may seem. Every step forward is a step in the right direction.
Stay Educated
Continue to educate yourself about personal finances. The more you know, the more confident you’ll be in making decisions going forward.
Ready to Take Control of Your Finances Post-Divorce?
Money can be one of the hardest parts of a divorce–financial questions looming in your mind night after night.
Cue the anxiety.
Countless single moms have been in the same place as you. Including me. These tips can help.
And better yet? You don’t have to do this by yourself. With a financial advisor’s support, you can navigate the path of single parenthood with confidence. By setting clear financial goals, celebrating every milestone (no matter how small it may seem), and staying educated about personal finances, you get to control what happens. That freedom can feel amazing. With your newfound financial independence, you’ll be able to look forward to a stable future–for you and your children.
Published: November 3, 2023
