When I got divorced, I was a stay-at-home mom working about five hours a week. I had no real job, no special savings, and a very difficult ex that required a ton of energy to manage. I was shoved into the deep end, swallowed a bunch of water, and was flailing. It was a tough spot to make smart decisions (so I made a lot of splashy, panicky kind of decisions - don’t do this).
Here are the steps I took to regain Control of my financial well-being. Don’t rush this, just understand where you are in the process. Go at your own pace. It will all work out. This sounds like a 12-step program and it kind of is.
STEP 1: Awareness. I’ve worked at a lot of startups. It’s expected that the company will run at a financial deficit for many years. Somehow that’s acceptable for businesses, but single moms don’t get that level of acceptance.
What should I do at this stage? Understand that you may be operating in the red for a while as you start up your new life. Prioritize your emotional well-being and healing first. Keeping your head above water doesn’t mean this isn’t a blank check, Carte Blanche excuse to spend your money on everything and anything.
STEP 2: Acceptance. Everything has changed, and your old financial system will need to change too. I was in this phase for a long time. At this stage, I would look around at my financial situation and say, “I see you, but I don’t have the bandwidth to address you.”
What should I do at this step? Recognize that your old ways of doing things won’t work. You can’t keep spending the way you were spending, nor should you. You are forever transformed. It’s time to put your credit cards away and use only your debit card. You will begin to be more thoughtful in the way you spend money. And it’s totally okay if you need to use your credit card.
STEP 3: Reframe. If you’re like me, you may find yourself with minimal savings, debt, and a reactionary mindset. It took me a long time to see the debt for what it was. It wasn’t a mountain of debt; it was a mountain of good memories and healing. It is evidence of what I prioritized.
What should I do at this step? Having good debt will pay big dividends in the long run. Keep telling yourself this. Be proud of the choices you’re making. These are all on your own. Understand you will make missteps as you venture forth. Try your best to make financial decisions from a place of love, not fear, and keep using that debit card!
STEP 4: Get help. I read a lot of books and watched a lot of videos about finances and budgets. I find it takes multiple sources of information to get a formula that works well for you. My favorites are from Suze Orman (no-nonsense, straight talk), Jen Sincero (helps you rebuild your relationship with money), and DowJanes (sassy women investors).
What should I do at this step? Start to reeducate yourself about budgets and investing from people you can trust and respect. I value the opinions of women because they inherently understand where I’m coming from.
STEP 5: Forgive. Take a moment to forgive yourself for your financial missteps.
What should I do at this step? Think back over the past months (or years in my case!), and look at how you’ve been spending. Write down your good purchases and bad purchases. Note what makes them good or bad in your eyes. Bad - not sending my kid to a more expensive, groovy preschool because I was afraid of the cost. Good – making tiny contributions to 529 funds all these years so my kids can go to college. Forgive yourself. It’s water under the bridge!
STEP 6: Plan. When you reach the point where you feel you can be calm and thoughtful, it’s time to formulate your financial legacy plan (and start to have fun!).
What should I do at this step? Put all the thinking into action. Strategy is just words on the page without action. Here’s an iteration of what my method has been.
Spend less than you make (using a values-based budget).
Pay off high-interest debt. (Use a debt consolidation company or file for bankruptcy. You won’t be ruined for life. It’s OKAY!!!).
Save 6 – 8 months of an emergency fund in a high-yield savings account.
Invest. This creates passive income streams.
Become a philanthropist and give back!
Thanks for the reading recommendations! I will check out the Jen Sincero--this old pinko is also trying to repair her relationship with money and so far I have been resistant to advice from "The Man."