Yahoo Finance How To Go From Broke in Your Marriage to a Millionaire Post-Divorce
While nobody aims to get divorced, the reality is that you have to be prepared for the worst-case scenario. According to recent data from the Centers for Disease Control and Prevention’s National Center for Health Statistics, there were 673,989 divorces across the country in 2022.
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A divorce can be a stressful and expensive procedure that leaves both parties in a challenging situation. The good news is that it’s possible to go from being broke while married to a millionaire after your divorce, but it may take some time.
How can you build wealth after your divorce?
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View Your Divorce as a New Beginning
Trying to get rich post-divorce will depend on which stage you’re reading this at. When you’re going through the legal process of ending your marriage, you could be caught up in the paperwork and stress of it all. However, it’s important to remember that you’ll end up on the other side eventually.
“It’s easy to slide into merely thinking of divorce as a ‘failure,’ but I encourage my clients to take the big-picture view and also see the aspects in which you can, in fact, have a successful divorce,” said Holly Davis, family law attorney and founding partner of powerhouse firm Kirker Davis. “This happens when you take an expansive view of divorce as a moment in which you transition into a new life, and a new beginning.”
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If you were broke when you were married, your divorce could be an opportunity to take your finances seriously for once. This could be the new beginning you need to start on a new path.
Davis added, “While we can’t pretend the emotional aspects aren’t there, it’s crucial to put those aside and take a clear-eyed, practical view when it comes to finances.”
You’ll want to start off by taking stock of your current income, any debts that you may have and your investments to see where you stand. From there, you can decide which areas will require your attention first.
Figure Out Your Living Situation
As you transition toward the next phase of your life, you’ll want to figure out your living situation so you can focus on investing in yourself and building wealth. You don’t want to be stuck in an uncomfortable position where you’re unable to focus on your financial goals because of a stressful living setup.
“While keeping your home after a divorce may seem to offer some much-needed stability during a time of upheaval,” Davis said, “it’s important to make a full assessment of whether or not this is truly the best possible option.
“Once your housing situation is squared away, that creates an immense amount of breathing room to set aside funds for investing and for retirement and planning for the next phase of your life.”
Make a Revised Budget
“When it’s happening, you need to batten down the hatches and admit to yourself that it’s going to suck,” said Robert Persichitte, a CPA and an affiliate professor at Metropolitan State University of Denver. “There’s no way around it; your life has major shifts, and your finances will be no different.”
Now that you’re in a completely different scenario, it’s important that you revise your budget and overall financial goals to reflect your current situation. Since you’re on your own for the first time in many years, you’ll want to decide how you want to proceed. The most important step involves revising your budget so you have a financial plan that works for you.
“Making a revised budget that is practical is important for getting back on your feet, and housing is often one of the largest expenses on a budget sheet,” Davis said. “That’s why after a divorce it’s important to consider major changes such as letting go of your current place of residence.”
Your new revised budget should help you figure out how much money you have coming in and going out so you can adjust your lifestyle.
Create a Game Plan
You want to create a game plan based on your new budget and expenses. If you want to become a millionaire within five years, you’ll have to run some calculations to see what that’s going to take in terms of savings per month and what actions you’ll have to take to make this a reality.
“First, plan to get through the next 12 months, then plan to look at your long-term situation, including goals like education, relocation and retirement,” Persichitte said.
“Remember to trust the plan. Especially in the first 12 months, you’ll feel stuck and like all your money covers your divorce. It’s natural and will get better if you have a good plan.”
Invest In Yourself To Increase Your Income
The final step is to find ways to invest in yourself to increase your income and boost your savings. Since you may have more free time, you can dedicate some effort toward learning a new skill or trying to go back to school.
As you improve your skill set, you put yourself in a position to earn more. When you earn more, you’ll have more money to allocate toward your investments to become a millionaire eventually.
Closing Thoughts
While leaving a marriage with limited funds can be extremely stressful, you can always turn things around and use this time to focus on building wealth.
“Think in terms of your long-term goals, the well-being of your children and your financial future,” Davis said. “Take some time to consider how much your life has changed from what it was five years ago and how much it might change five years in the future.”
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