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Divorce is not a reason to let your money problems kick your butt!  When they start to get you down, you need to determine the specific problems and develop solutions to help you achieve financial success.


In this article "make" represents your total income.

Determine your income problems 

Don't let your problems go too far.  As soon as you start to see trouble, you need to take action. Upon negotiating your divorce settlement or any modification of your household earnings, you should begin to see any shortcomings in your income.


Depending on your loss of income, you will need to immediately find secondary employment or new employment that will provide the gap income necessary to keep you on a sound financial schedule.

Overall objective

Example: Maintain 90% of your household income prior to the divorce for years one and two with emphasis on maintaining 100% investment elections in 401(k), IRA or other investment accounts.  By year three 100% of the former household income should be re-established with limited loss on total investments. 


In this article "save" represents the amount you actually contribute to meet your financial objectives. 

Determine your saving problems

Most of us simply save too little.  We fail to recognize and provide our investments the needed funding in order to achieve the maximum potential to secure what is recommended for retirement.  This means the problem is that we don't regard savings as a necessity in our household budget.  If you're saving too little, you're either not earning enough based on your spending habits (meaning it's a spending problem) or you simply aren't earning enough over your monthly expenses (meaning it's an earnings problem) to account for incremental savings.


Saving money is easier when you set-up a savings plan.  Refer to our DMK Budget Series for tips, articles and apps that can help you establish a budget and ways to save. 

Saving is much easier through automatic deposits through savings programs and investment plans like a 401(k).  Upon incorporating these into your plan you will begin to establish the average annual savings potential needed for a healthy portfolio.  The hard part is taking the first step!  

Something to plan for tomorrow

If you currently aren't enrolled in a 401(k) plan at work, contact your HR Specialist and determine if your employer provides a 401(k) benefit.  If they do, ask if they match any portion of your contributions.  As soon as an open enrollment period begins, get signed up and allocate the maximum contribution you can afford.  Your goal should be at least the same as your employer's maximum matching contribution.  It's FREE money!

Something you can do today

Download budget and savings apps today.  They can help you track your spending, set savings goals and sync your accounts, budgets and savings.  All will keep you motivated to keep your finances a priority!

Some of the best ways to save, when you overspend, is through "round-up" or "keep the change" savings programs offered through banks and savings apps. These programs deposit the change from every transaction into a savings account.  The more you spend, the more you save.  Perfect for overspenders!

Many savings apps have other helpful features to help you save also.  Read our article, DMK Best Automatic Savings Apps to get started.  More information about problematic overspending is offered in the last section of this article.

Income deficit solution

If you don't earn enough, it's time to step-up your earnings game with a new side hustle or career improvements.  Read the DMK Career Challenge Special Section, in the Summer/Fall 2020 edition of Starting Over Magazine for help with your career.  Ideas for a side hustle can be found in our March 2019 article, Part-time Jobs.

Overall Objective

You'll need to establish consistent savings contributions that feed your investments with the appropriate amount of funding necessary to meet your retirement goals.  In order to do so, you may need to set up automatic savings and budget plans to ensure ongoing, maximum contributions.  Be aware of tax liability, commissions and fund fees.  

You'll also need to ensure you earn enough money to account for consistent contributions.  Making sure your savings is funded before your monthly expenses is one of the best ways to realize your income shortages as they apply to your total financial picture.  Adding another source of income or making changes to your career in order to account for any shortage is the primary objective.


In this article "grow" represents your ROI (return on your investments) or the percentage of annual earnings on what you saved.

Determine your growth problems

While automatic savings plans and 401(k)'s are extremely beneficial in maximizing your contributions, you should be aware of your risk parameters as they apply to your age, circumstances, income and goals.  The problem is that many of us don't regard those parameters and fail to maximize our savings growth potential and/or protect it accordingly.  Most of your money may be in low risk, low yield investments.


If you don't currently have the time to research your investments, you should hire a wealth manager or investment broker who will be able to properly guide you in the right direction.  However, this is your "nest egg" and you should be aware of any investments that are not producing results within your current risk parameters and that fail to meet your anticipated goals. This includes assets like your home, 401(k), IRA, funds, stocks, bonds or other investments for which you expect a return.

Seek advice or research specific types of investments that are right for your age, goals and amount you have to invest.  You should understand the fees and penalties, if any, upon making changes in your investment portfolio.  A financial advisor can help you.  Get to know the variety of investments available in our May, 2019 article, Investment Options Explained.

Overall Objective

According to Fidelity, the nations largest retirement plan provider, you should have saved half your annual salary by age 30.  So if you make $40k/yr, you should have at least $20k saved.  By age 40, you should have twice your annual salary.  By 50 you should have 6 times your annual salary.  While this is just a recommendation, it's a good one.  Your objective is to incorporate your savings plan with your opportunity for growth through investments based on your established risk parameters.


In this article "spend" represents controlling your spending in order to maintain your saving's objectives, growth goals.

Determine your spending problem

You spend too much on things you don't need.  You aren't regarding your savings as a necessity and therefore spend money that could be easily saved over your lifetime to meet your financial goals.


You will need to establish a spending budget to help reduce frivolous spending.  Use cash instead of cards to encourage awareness of weekly spending.  Shop discount stores, buy store brands, eat at home, make your own coffee, etc.  Realize your spending weaknesses and recognize even the smallest daily purchase adds up.  You don't need to cut everything out to make a huge impact.

A daily $3 purchase like coffee for breakfast or anything that adds-up can really cost more than you realize. 

See how your $3 makes a difference:

After your first $90 monthly contribution ($3/day) and continuous contributions every month thereafter for 25 years, with a 15% ROI (inflation rate 1.7%) your return on investment would be $182,510 before taxes.  That's one very expensive cup of coffee.

So, ask yourself.  Can you find that $3 of wasteful spending in your budget?  If so, it's like finding  one hundred thousand dollars for your future!

Overall objective to spending

Spending is like any other liability in your budget.  It's a force of nature like food is to your body.  In most western societies it's impossible to live without spending as part of a regular lifestyle.  However, too much of a good thing can destroy your future goals.  You need to modify your spending habits that are causing you to lose sight of your savings goals.  Put your future in perspective and keep your eye on it like a hawk!

You will want to remove the superfluous spending and immediately reallocate those funds to your savings contributions through automatic savings plans like mentioned above.  Don't wait.  Avoid switching one bad purchase for another by getting those funds immediately allocated toward your savings.  Everyday that goes by without doing this is a loss of savings and investment earnings for the future.

Once you begin to spend less and assume a higher savings balance, your poor spending habits will be under control.  If you begin to fall back into such habits you will want to immediately evaluate the problem areas again to re-establish your spending budget.


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