Financial Recovery After a Divorce: Building a Plan with Your Advisor and Attorney

Monarch Wealth Strategies | August 29, 2025

Key Takeaways:

Divorce affects various areas of your financial life, from short- to long-term needs; however, with the right professional guidance from a wealth advisor and attorney, financial recovery and a thriving next chapter are possible.
It’s essential to take a proactive approach toward your finances to reflect your new post-divorce life and goals, ensuring you monitor your credit score, manage your debt, plan for the unexpected, and create a budget that considers new expenses such as alimony and child support.
Working with a wealth advisor and attorney familiar with divorce at every juncture is important to helping you rebuild your wealth strategy, plan for new goals, manage tax implications, and access trusted referrals and resources.

Between 40% and 50% of first marriages end in divorce,1 which can take an emotional and financial toll on both spouses, children, and other associated parties, depending on the circumstances. Regaining financial stability following a divorce becomes a priority, as divorcees must navigate immediate expenses, caregiving, and ensuring their long-term security. We often work with clients at every stage of the divorce process, offering practical solutions to help empower them to navigate this new chapter with more confidence. Let’s explore how to financially recover after a divorce with the help of your wealth advisor and attorney.

Understand Where You Stand Financially

To begin building a plan to move forward, you must first understand your current financial footing. Your professional team can help you review your assets, liabilities, and future obligations to give you a comprehensive view of your finances. Here are a few steps to get started:

Organize Your Finances: In a spreadsheet or with the help of your advisor, organize all your financial assets and liabilities, including your bank and retirement accounts, investments, credit cards, mortgage, subscriptions and memberships, insurance policies, and other expenses.
Compare Your Income and Expenses: Assess your current income and expenses. Are there areas you feel financially strained? Discuss with your advisor where you can reduce or cut costs to give you more breathing room or allocate toward other goals in the future.
Forecast Your Future Income and Expenses: With the help of your attorney and advisor, factor in any future obligations, such as spousal or child support or new income, into your overall finances. This will give you an idea of your future financial standing and any gaps to address.

Create a Post-Divorce Budget and Recovery Plan

Now that you have an idea of your current and future financial standing, you can begin to make a realistic post-divorce budget, adjusted to your needs. This is an important step in your next chapter as you consider not only your short-term needs but also your long-term goals, such as college funding for your children and retirement.

Set Financial Goals: In collaboration with your advisor, outline your short- and long-term goals. Short-term goals may include a relocation, a career change, or pursuing a new skill, while long-term goals may include a secure retirement; all will affect your budget.
Create a Budget: With guidance from your wealth advisor, develop a realistic budget you can stick to. This is an essential step in regaining financial stability. An advisor can remove the guesswork, providing thresholds of how much you should spend in each area tailored to you; for example, “up to 30% for housing or no more than 15% for transportation costs.” Your budget should also consider other financial aspects such as paying down debt, saving for retirement, and fun money.
Include Post-Divorce Assets and Liabilities: Ensure your new budget includes line items for new income or expenses related to your divorce, such as spousal or child support, alimony, taxes, and legal fees.

Rebuild Your Finances

When you share finances with a spouse, splitting those assets and liabilities can significantly impact your short- and long-term security. Rebuilding your finances with a clear plan can help give you peace of mind that you’re taking the steps to take care of yourself and your family. Here are areas to consider when rebuilding your finances:

Monitor Your Credit Score: Your credit score determines your ability to secure a mortgage, a car, a credit card, and more. If you have poor credit following a divorce, it can add more financial stress, making it harder to recover. A divorce can impact your credit score in various ways:
- If you share joint accounts with your ex, your score could be affected if there are missed or defaulted payments. Be sure to close or monitor those accounts, or discuss your options with your lawyer to help protect your credit score.
- If your income has been reduced, it could affect your ability to make timely payments. Be sure to contact your lenders to discuss financial hardship or payment plan options, if necessary.

You can access your credit score for free annually from the three credit reporting bureaus2 to review your obligations and any outstanding balances, and to address discrepancies.

Build an Emergency Fund: When rebuilding your finances, it may feel challenging to allocate funds toward savings. However, having an emergency fund is essential to helping safeguard you and your family from the unexpected. An unanticipated repair, injury, or loss of income could make it even more difficult to recover long term. Here are some factors to keep in mind.
- Your emergency fund should include around three to six months’ worth of living expenses. Consider saving in a high-yield savings account, which provides higher-than-average interest than a traditional savings account while being easily accessible when necessary.
- Work with your wealth advisor to build your savings into your budget via an automatic transfer from your paycheck (i.e., “out of sight, out of mind”) or by reducing or cutting unnecessary expenses.
Manage Your Future Investments: It’s essential to review your investments to ensure they reflect your post-divorce life and goals.
- An advisor can help you review and make necessary adjustments to investments such as insurance policies, retirement accounts, and asset allocations so you stay on track toward your financial objectives. They can also help ensure your beneficiary information is updated and your investments are aligned with your new risk profile and time horizons.
Explore New Income Sources: Identify new ways to address income gaps, such as securing a new skill, negotiating a pay raise, exploring a side gig, and other options.
- Discuss how new income and taxes work into your overall financial picture with your advisor and tax professional.
- Consider financial tradeoffs; for example, the cost of taking a new course versus the long-term income the new skill could afford.

Seek Professional Advice After a Divorce with Monarch Wealth Strategies

Having a professional team in your corner following a divorce is a critical component contributing to financial peace of mind and stability for you and your family. With professional expertise and insights from a wealth advisor and attorney, you can better navigate legal and tax implications, financial considerations, and opportunities you may have yet to explore. When assembling your team, be sure to outline your expectations, including coordination and collaboration, to make the transition as seamless and efficient as possible for you.

Monarch Wealth Strategies has worked with clients at every stage of divorce and understands that each phase brings unique challenges. Whether you are considering divorce, are amid proceedings, or have finalized your settlement, we’re here to offer resources, guidance, and referrals to make your new chapter smoother.

As a Certified Divorce Financial Analyst® (CDFA®) professional, Wealth Advisor Irene Timmons specializes in advising clients through the separation and distribution of assets, tax implications, spousal and child support, and other financial areas in the divorce arena.

Visit us online or contact our team at 805-564-0800 if you’d like to discuss your thoughts about a divorce or address building financial stability following a divorce in-depth. Let us help you design a wealth strategy that’s uniquely yours.

Financial Recovery After a Divorce: FAQs

Should I sell my home after a divorce?
- Deciding whether to sell your house after divorce will depend on factors such as your financial needs and taxes, which could have implications for both parties if you shared the home. We recommend consulting with your advisor, attorney, and CPA to understand if the benefits will outweigh your obligations, such as taxes, moving costs, and other factors.
How long does it take to financially recover after a divorce?
- Every client’s situation is different, possibly requiring reevaluating and significantly adjusting spending and savings habits. Knowing how much post-divorce income and after-tax assets you will have is an initial step in determining necessary changes, and ultimately how long it may take to become financially stable again. Having a strategy in place and the trusted guidance of a professional team advocating and supporting you can also help give you peace of mind and a realistic timeframe for working toward your goals.
Will joint debt affect my finances after divorce?
- Joint debt may affect your finances and particularly your credit score after a divorce if, for example, you share a credit card or loan, and there are missed or defaulted payments affecting your ability to secure loans and credit in the future. Another example may include if joint debt is divided among you and your ex-spouse in a divorce settlement, making you responsible for repayment and potentially adding to your expenses.
How do I manage the emotional stress from a divorce?
- In addition to leaning on your personal support system or a counselor, our team is here to provide advocacy and emotional support during this often difficult transition. We understand becoming a single parent or reentering the workforce after being a stay-at-home spouse, among other changes, can be overwhelming. We’re here to offer resources, guidance, and referrals to make your new chapter smoother. Please contact us to learn more.
Are there any tax implications after a divorce?
- There are several tax implications following a divorce related to the separation and distribution of assets, retirement accounts, child and spousal support, and changes in tax filing status. Please consult your attorney and tax professional for in-depth expertise.

Sources:

Consumer Financial Protection Bureau. “Where can I get my credit scores?” Consumerfinance.gov. October, 19, 2023. https://www.consumerfinance.gov/ask-cfpb/where-can-i-get-my-credit-scores-en-316/#:~:text=You%20can%20get%20a%20credit,scores%20that%20are%20slightly%20different.
Modern Family Law. “Top 10 Divorce Statistics You Need To Know.” Modernfamilylaw.com. May, 9, 2025. https://www.modernfamilylaw.com/resources/top-10-divorce-statistics-you-need-to-know/#:~:text=Current%20U.S.%20Divorce%20Rate,significantly%20down%20from%20earlier%20years%20.