Community Question: When you're first on your own after a split, the financial elements can be completely overwhelming. It seems like every expert has a different idea of what we should be doing with our money, but right after a divorce is not the time when you've got cash to spare. I have student loans, a very small amount of credit card debt, no car payment, no mortgage payment — I rent — and no money saved for emergency funds or retirement, let alone my kids' education. Where do I put my cash first?
Sanyika Calloway Boyce writes:
I am proud of you for taking a proactive step with getting your finances in order post-divorce and more importantly recognizing that you need to find a solution that works for your unique situation. While it might feel like you've"lost time" just remember that it is never too early-or too late-to take control of your finances so good for you for taking this necessary step.
I suggest you get a handle on your finances in 4 steps. The very first thing I'll stress is that you cannot afford NOT to save, because as women we'll likely live an average of 9 years longer than men and we need more saved to support our lifestyle — longer.
1. Open and maintain a saving account solely in your name, this is just a smart thing for every woman to do regardless of your martial status. Make a personal commitment to always keep at least $100 in the account as a foundation you can begin to build upon.
2. Commit to saving at least 5 percent (preferably 10) of everything you earn. It might not seem like you have any money to do this but start small by exercising your saving muscle with coins.
Here's what you do:
- Get a coin holder (ideally a jar that's not easy to stick your hand into!)
- Commit to dump all of your coins in the jar at the end of the day
- Decide what you want to do with the money BEFORE you know how much you have
- For example: you could set a goal to apply fifty percent of it to your student loan or credit card balance and put the rest in savings, or use it to start an emergency in house cash fund, this really comes in handy when you've forgotten to go to the ATM. You can even earmark a portion of it as your "pamper me" fund or use the money for a night movies, or other family fun activities.
- Set a date to count the coins (give it at least 30 days) almost every grocery store and even some banks have a machine that will do it for you
3. Find the best saving vehicle, companies like ING Direct pay a certain percentage (usually more than you can get on most no-minimum savings accounts) and the account is online which makes it very convenient.
Plus, if you want to put your savings on autopilot, many banks now offer programs that make saving automatic by rounding your debit card purchases up to the next dollar (for example if you spend $12.51 you will see a debit for $13 and $0.49 cents will be deposited into your savings account)
4. Max out your 401k plan or at least up to the company match. This is pre-tax dollars and will allow you to save automatically while reducing your tax obligation. Don't be fooled into believing that you have to have a ton of money to get started, you can literately begin by saving $25 a week and let it build slowly. It's not how much to have to save, but that you see enough of a benefit to save no matter what your current circumstances might be.
Good luck. I know you'll be just fine!