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Your Divorce Money Mojo

Money and divorce. I can practically see you shudder. For good reason: google “financial impact of divorce” and you’ll get 57,800,000 results, which from the first page, aren’t exactly positive!

You already know that divorce is costly - from legal fees, to splitting your assets, to the loss of your spouse’s income, to the hidden costs of raising your kids that might not be covered by child support. For many women, the financial hit of divorce is one of the things that scares them the most.

But did you know there can actually be financial benefits to divorce too? They’re less obvious at first, but if you look closely enough, there really can be a silver lining to that big divorce money cloud.

So, if you’re feeling like you could use some money mojo (and who couldn’t), read on for 3 ways your divorce can actually improve your bottom line.


1. You are totally in control of your finances.

No more arguing about spending, or saving. No more choosing whose financial priorities are more important. When you’re on your own, the reins are in your hands, and you can reset and create your own financial plan. If you’re a saver, you can save as you choose. Of course, if you’re a spender, well, you’ve got the freedom to do that too.

Be sure to use your new financial freedom wisely. Money mojo means being more financially healthy at the end of the day, not less!


2. You get early access to retirement funds penalty-free.

This little known fact can really come in handy if you need access to cash: divorce is one of the few times that 401k funds can be accessed before age 59 ½ without incurring that early withdrawal penalty of 10%.

It works like this: Let’s say you’re going to receive a share of your spouse’s 401K. Instead of having it transferred into your IRA - where it will be subject to the usual rules and restrictions - you can elect to take all or part of your interest out now as cash. You’ll still pay taxes on the distribution the year you receive the money, so we recommend you do this only if you really need cash now. Like to put a down payment on your new house.

You’ve got to have the funds transferred directly to you instead of into your IRA to take advantage of this rule. Talk to your lawyer, financial advisor, or the administrator of the 401k plan to make sure you do this correctly.


3. Your kids might get better college financial aid.

If you’ve got kids at home who are college-bound, their ability to get financial aid might actually be easier once you’re divorced. The Free Application for Federal Student Aid only requires financial information from the custodial parent, not both parents.

Note that child support and alimony received from your former spouse do have to be included in your income. Still, there can be some creative ways to structure your divorce settlement to take better advantage of financial aid. If your divorce isn’t finalized yet, talk to your divorce team about what you can do so that you can put yourself in the best position to receive aid.

Also be sure to check the U.S. Department of Education’s instructions so your child fills out the form properly.


Remember, while it’s easier to focus on the financial downside of divorce, there can be some upside, too. Be smart and strategic, so you can best take advantage of the options available to you.

You got this!



I was married for 30 years and experienced financial anxiety due to my former husband’s irresponsible attitude about money. He is a very intelligent man but had no common sense, no financial sense and no self control. At times it seemed he literally “threw money out the window”. Somehow I kept things semi under control. When we divorced he was almost debt free- just a car payment. Ten years later he is on the brink of bankruptcy- with an income of at least 75% more than mine. He has also spent all his inheritance from his parents.

When I divorced I had teacher’s retirement (with health insurance) and I was awarded a small amount of alimony. I had to figure…



Thank you for this great article!



I LOVE your comment! Keep letting that light in!



The ability to be in full control of my money and to make wise decisions FINALLY is such an amazing thing! For over 10 years I was kept out of the loop or made fun of for what I thought was good sound decisions. I literally forgot that I am good at this! I am good with money and it feels so good to be in control again. My future looks much brighter now. To use a credit card because I want to get points vs bc I suspect there's no more cash in the bank is like opening a window and letting the light in!

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