Financial Planning for Women Going Through Divorce: What to Do First

Divorce changes everything.

I should know — I found myself navigating a divorce and a layoff from my corporate job at nearly the same time. Suddenly, I was untethered from the life I thought I had built — emotionally, professionally, and financially. I was overwhelmed and unsure where to start. But I also remember the moment that changed everything: deciding to take back control of my finances. That decision became the first step toward rebuilding not just my bank account, but my confidence.

If you’re in a similar place, you’re far from alone. Nearly 80% of women experience a significant decline in their standard of living after divorce — especially those who took time off to raise children or contributed in non-financial ways to the household. It’s a staggering reality, but it’s not the end of the story.

There is a path forward. It starts with getting organized, protecting your financial well-being, and making decisions from a place of knowledge — not fear.

Here’s what to do first.

Understand Where You Stand Financially

Before you can make sound decisions, you need a clear picture of your current financial situation. Begin by gathering all relevant documents, including:

• Bank and investment account statements

• Retirement account balances (401(k), IRA, pensions)

• Credit card and loan statements

• Mortgage and property documents

• Tax returns for the last two to three years

• Insurance policies (life, disability, health)

Make copies and store them securely. If you're unsure what to look for, a financial advisor can help identify what’s missing and what matters most in the early stages of planning.

Open Accounts in Your Own Name

If you don’t already have them, establish individual bank accounts, credit cards, and online logins for essential financial tools. This is especially important if your spouse previously handled most or all of the household finances.

Set up a system — even a simple spreadsheet — to track your income, spending, and accounts going forward. Having ownership and clarity now builds confidence later.

Build a Post-Divorce Budget

Your income, expenses, and priorities may change significantly after divorce. Now is the time to create a new spending plan that reflects your current life.

Start with your essential expenses: housing, food, insurance, and transportation. Then build in discretionary items and new goals — like funding a retirement plan, saving for legal costs, or starting over in a new home.

If you anticipate receiving spousal support or child support, treat those as temporary sources of income. Build a budget that works even as these payments change over time.

Protect Your Credit

Many women emerge from divorce with damaged or limited credit history. Make it a priority to:

• Check your credit report

• Pay bills in your name on time

• Establish or rebuild credit with low-limit cards or secured cards if needed

If there are joint accounts still open, work with your attorney or financial advisor to understand how to handle them during the divorce settlement process.

Understand What’s Marital vs. Separate Property

One of the most complex financial areas in divorce is identifying which assets and debts are considered marital property (shared) versus separate property (yours alone).

Marital property often includes:

• The shared marital home

• Joint investments and bank accounts

• Business interests created while married

• Retirement accounts contributed to during the marriage

Separate property might include:

• Gifts given to you personally

• Inheritances kept solely in your name

• Assets you owned before the marriage (if they were kept separate)

Be cautious about commingling — mixing personal assets with marital ones — as this can make it harder to claim what’s rightfully yours.

Prioritize Retirement Accounts and Long-Term Security

It can be tempting to focus on short-term stability — like keeping the house — but don’t overlook your long-term needs.

Retirement accounts such as 401(k)s, IRAs, and pensions might be some of the most significant marital assets. If you are entitled to a share, these can be split using a Qualified Domestic Relations Order (QDRO) without incurring taxes or penalties. Funds can usually be withdrawn from these accounts for a certain period without facing the IRS' 10% early withdrawal penalty. (However, regular income tax will still apply.)

In many cases, it may be wiser to pursue the retirement assets rather than physical property, which can carry higher maintenance costs and be less liquid in the future.

Update Beneficiaries and Estate Plans

After a divorce, it’s critical to revisit:

• Beneficiaries on retirement accounts and life insurance

• Health care directives

• Powers of attorney

• Your will or trust

Many women unintentionally leave former spouses listed on their key accounts — and in most cases, those designations override your will. Make sure your documents reflect your current wishes.

Plan for Taxes in the Settlement

Dividing assets may come with tax consequences. For example:

• Roth accounts grow and distribute tax-free

• Selling the marital home can have capital gains implications

• Traditional retirement accounts are fully taxable if cash is withdrawn

• Alimony (now called spousal support or maintenance) is not taxable income for the recipient for divorces finalized after 2018; nor are payments deductible by the payor.

  
  

Work with a financial advisor and a CPA to understand how the settlement will impact your future tax situation.

Find the Right Support Team

You don’t have to do this alone. A team of professionals — including a divorce attorney, financial advisor, and tax expert — can help you make informed decisions and avoid costly mistakes.

Choose people who listen, educate, and empower you. Look for a Certified Divorce Financial Analyst® (CDFA®) or a financial advisor who specializes in working with women during life transitions.

Final Thoughts

Taking control of your finances isn’t just about numbers on a spreadsheet. It’s about reclaiming your voice, your security, and your future. It’s about moving from fear to clarity — one thoughtful decision at a time.

You don’t have to have it all figured out today. You just need to take the next right step. And then the one after that.

With the right guidance, the right support team, and a little self-compassion, you can come through this stronger, more confident, and in full control of your financial life.

You’re not starting over — you’re starting forward.

To learn what it's like to work with a financial advisor as you're recovering from your divorce, you can book a free call with Life Story Financial.  For more personal finance tips, download my free ebook series that covers debt management, growing your income to save more, investing wisely and retirement planning.