I Got a Divorce. How Do I Start Investing and Saving?

Our editor-in-chief makes cents of putting your finances back together after divorce

Illustration of a wedding cake split in two

The Balance/Alice Morgan

Dear Kristin,

I'm in my mid-40s and recently divorced, which essentially cut my HHI (household income) in half and doubled my living expenses. So, for the first time in a long time, I find myself on a pretty tight budget.  Do you have any tips for the best way to budget while still trying to save and invest for the future?


Not Living Lavishly in Louisville

Dear Lavishly,

I’m sorry to hear that your relationship has recently ended. It’s not just a time of huge emotional upheaval in your life, but also, as you’ve written, a time of financial change. Your household income (HHI) has been halved, and as I’ve discovered, unfortunately, Uncle Sam doesn’t give as many tax deductions to us single filers. So now, with fewer resources and more out-of-pocket expenses, how do you set yourself up so that your divorce won’t ruin your financial future?

Don’t worry Lavishly, you’re in luck. Because you can absolutely save, invest, and do it all on your own. 

You haven’t given me your full background, but consider this as comfort: Chances are, you’ve been here before haven’t you? Single, and paying for your bills yourself. And while it’s not as financially “easy” as someone who is married and able to slice their expenses in half, it is doable. And you’ve already mentioned the B-word (budget), so I suspect you’re on the right path.

First, make a budget. A new budget that takes into account your new life. This could be an emotional undertaking, so prepare yourself. You might realize that you aren’t able to go on as many vacations or afford as nice a place as when you were married, and that might stir up some feelings. That’s OK. Consider these the first steps on your journey. Where you start doesn’t have to be where you end up. 

If you’re prioritizing building up your savings and investments, be mindful of that when you create your budget and cut some things out to make space for those goals. You say things are tight, so try and be ruthless (but honest) about your financial priorities. Maybe you need to get a roommate or if you have kids, you might need to ask family and friends to watch them so you can save on childcare. Maybe you need to ask for a raise, or seek out a job that pays better. Maybe, you need to do all of these things. But you won’t know until you sit down with your finances and chart out that path for yourself. 

As part of this budget, include saving and investing. Start small, until you feel that you can do more. I think it helps to automate your savings and investments, so that way you stick to the plan each month without relying on your memory to get it done. When it comes to investing, make it easy on yourself and look at index funds and ETFs (exchange-traded funds) that you buy every single month. With the markets down 17% so far this year, this is a great time to start,  because you’re getting everything at a discount.    

And if you haven’t opened up retirement investment accounts, do so now. It could decrease your tax liability and help you get tax-advantaged savings for your future.                   

This might feel like pushing a rock up a hill, but I really believe that if you stick to the plan, your accounts will start to look more like a snowball, getting bigger and bigger as they roll down the hill. Don’t forget to make adjustments to your budget as needed and as your life changes. You might get a promotion, have a child move out for college, or you could get remarried. Life is unpredictable, so make sure that your budget continues to evolve along with your financial picture. 


If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

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  1.  IRS. “IRS Provides Tax Inflation Adjustments For Tax Year 2023.”

  2. SP Global. “S&P 500 Overview.”

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