Which Financial Steps Should I Take After a Divorce?

Q: What steps should I take to ensure ongoing financial stability after a divorce?

A: Divorce can be difficult on many levels, and one of the most formidable challenges can be the financial strain.  Here are some financial steps to take after a divorce:

1. Close all joint accounts

Review your financial accounts and credit cards and lose the jointly owned ones. Not doing this step can leave your accounts open to fines and maintenance charges. Worse, you can get stuck picking up the tab for the purchases your ex-spouse makes on a shared credit card or paying crazy overdraft fees if they go wild with your joint checking account!

2. Change beneficiaries on your savings and retirement accounts

Neglecting to change the beneficiaries on your accounts after a divorce can mean your ex-spouse will inherit your IRA, 401(k) or another savings account after you pass away.

3. Review your living trust

Don’t wait to review and modify your living trust and estate plan. Putting it off usually means never doing. Speak to your attorney for guidance.

4. Open new accounts

When the divorce is finalized, open new accounts with just your name as owner. This includes credit cards, checking and savings accounts.

5. Update your insurance coverage

Review all your insurance policies, including life, health, auto and homeowner’s insurance. Change any plans that were shared with your ex-spouse.

6. Build an emergency fund

You can open a new savings account at for just this purpose and save aggressively until you have enough to cover three to six months’ worth of expenses.

7. Adjust your budget to fit your new financial situation

You may have lost an income stream in the divorce, but your everyday expenses should be much lower. On the other hand, you may have new expenses, such as alimony and child support. Take time to determine how your income and expenses have changed and adjust your budget accordingly.

8. Update all legal documents and records

If you’ve changed your legal name during the divorce, be sure to change it on all your legal documents and accounts, including your driver’s license and Social Security number. You can contact your local DMV and the Social Security Administration for assistance.

9. Purchase a new safe and shredder

If your ex walked away from the divorce with the safe and shredder, replace them as quickly as possible.

10. Analyze your investments

If your ex-spouse handled all the investing, analyze your investments and create a new portfolio that fits your own investment style and needs.

By taking the steps outlined here, you can keep your financial independence after a divorce.