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Moving Forward after Divorce Settlement: Smart Ways to Utilize Your Money

Updated: Nov 5, 2023






Congratulations, you’ve finally settled your divorce and all those legal battles are in the past. While there is cause to celebrate the end of the proceedings and perhaps still some grieving process depending on your circumstance; divorce can be a real financial drain. However, it is important to realize that there is life beyond the settlement, and it could be a new beginning. You have the freedom to spend your settlement money in ways your former partner may never have approved. This is your chance to start fresh in life and plan for a bright future. So, what do you do with the divorce settlement money? Let us take a look at some smart ways you can utilize it!


This is both exciting and something that many women struggle with, especially if they have not previously experienced handling large amounts of money. In this blog post, we will provide you with some valuable tips that can help you make the most of your divorce settlement.





Budget for Necessities


After your divorce settlement, it is crucial to start by managing your money wisely. Determine your monthly expenses and create a budget that caters to your needs. This will help you avoid overspending and help you save money for future use. Be sure to have a solid plan for paying bills, rent, or mortgage each month and take into account any changes to your earning potential. Remember that now, you are on a single income and should plan accordingly.



Manage Debt and Pay off Debts


Now that you have some money, focus on paying high interest debts first. Read our sister site, the Financial Sherpa’s post about two main ways to pay off debt by benign snowball or an avalanche. You could also think about paying off your car or mortgage, student loans, and car payments. By paying off these debts, you could help reduce the financial obligations in the future and can save yourself a significant amount of money that would otherwise go towards interest payments. This will help you improve your credit score and give you the financial freedom you need to move forward.




Invest for the Future


It's never too early to start planning for the future. Consider investing your settlement money for long-term financial security. You can either invest in stocks, mutual funds, bonds, or real estate, depending on your risk tolerance and financial goals. Investing for the long-term can grow your money faster, help you achieve your financial goals as well as give you some peace of mind about your financial future. It is advisable to consult with a Certified Divorce Financial Analyst before investing in general or for retirement.




Plan for Retirement


Divorce settlements typically involve a division of assets, and you might have received a portion of a retirement plan, like an IRA, Roth, SEP, or Pension. Consider investing part of the settlement to save for retirement. You could also set up your own Roth individual retirement if you do not have one or get one in your settlement. It is advisable to consult with a Certified Divorce Financial Analyst before investing in a retirement plan.



Build an Emergency Fund


It is always advisable to have a cushion in case of an unexpected emergency. An emergency fund could help you deal with any unforeseen circumstances such as car repairs, home repairs, medical bills, or job loss. Experts suggest keeping a minimum of 3 to 6 months’ worth of expenses in an emergency fund.


Invest in Yourself


Another smart way to utilize the divorce settlement money is to invest in yourself. Furthering your education or developing your skills could help you increase your earning potential. If you have always wanted to start a business, this could be your chance to pursue your entrepreneurial dreams.



Treat Yourself


Last but not least, it's essential to treat yourself. After going through a divorce, it's essential to take care of yourself both emotionally and physically. You can use some of your settlement money to treat yourself to a vacation, wardrobe update, pamper yourself, get together with family, have a divorce party, or anything else that makes you feel happy and fulfilled. However, do so within reason, and ensure that you're not overspending.



A divorce settlement can provide you with some financial stability; however, to make the most of it, you need to plan carefully. By following the tips outlined above, you can use your money wisely, pay off debts, invest for the future, plan for emergencies, and treat yourself without completely emptying your settlement. Remember, this is your chance to start a new chapter, take some time to create a financial roadmap that will take you where you want to go.




If you need help figuring out your divorce possible outcomes and working on how it can be a good thing for you to contact us


Are you getting closer to your settlement or having post divorce questions? Contact us at and check out www.financial-sherpa.com

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