I’m starting over after a messy divorce — it’s left me totally skint

The financial shock of divorce can add even more stress (Picture: Getty Images)

More than 100,000 couples divorced in England and Wales in 2023, according to the latest ONS figures.

And for many, the financial shock that comes after a split can be as crippling as the emotional side, especially for the lower earner in the relationship.

After previously splitting costs with his wife, this week’s reader – 45-year-old Harry from Eastbourne – is struggling to adjust to managing his money alone.

In this week’s Money Problem, personal finance journalist and consumer champion, Sarah Davidson, shares some guidance on starting afresh.

The problem…

I’ve just come out of a messy divorce and honestly, I’m terrified about money. I’m 45, work full time with a £42k salary, and until recently I shared a mortgage, bills and childcare costs with my ex-wife. Now it’s just me paying rent (£1,100 for a two-bed so my son can stay), plus nursery three days a week, food, and all the usual stuff.

I walked away from the marriage with very little in savings – most of it went into legal fees. Meanwhile my ex earns more and has already bought somewhere new, which stings. I’m trying not to compare but it’s hard. I feel like I’m back at square one financially, with zero safety net.

How do I rebuild without feeling like I’ve fallen permanently behind? Is it even realistic to think about buying again in future, or do I need to accept I’ll be renting forever?

The advice…

I’m so sorry you’ve had such a tough time – relationships ending is hard enough without adding financial worries on top.

Firstly, I can hear it in the way you’ve described your situation. You’re unhappy, worried, and disillusioned. I think you need to work out what each of those feelings is really related to because I suspect some of it is about the end of your relationship, not about your financial situation. You need to separate the two (easier said than done, I grant you).

If I had to take a punt, I’d say the unhappy part relates to your ex and the changes you’ve experienced to your life over the past few months or more. She’s bought a new home and it stings. Okay, I get it. But here’s some tough love. You need to park that right now. She is now managing her life and you need to focus on managing yours.

You’re feeling worried, terrified even. Now this is about money, specifically about your financial future. I have some good news for you on this front, but more on that later.

Disillusioned next. You’re feeling like you’re ‘back at square one’, like you have ‘zero safety net’, as though you’ve ‘fallen permanently behind’ and you’ll be ‘renting forever’.

Harry. Stop feeling so sorry for yourself. You sound like you’ve given up before you’ve even started. You’ve got a choice here: look back or look forward.

Things may feel worse than they are (Picture: Getty Images)

At the moment you’re down in the dumps about what you’ve lost. But what about what you’ve gained? You’re at the start of a new phase of your life where you get to be happy if you choose it. You’ve got new relationships to look forward to. You’ve got the freedom to make decisions about your life without having to compromise for your ex.

You’re actually in a pretty sound financial position. You’ve got a decent salary. And you’ve got a job for heaven’s sake – more than an awful lot of other people do – which allows you to pay for childcare and rent a home so your son can stay. Come on, things could be a heck of a lot worse.

Let’s look at your question and edit it down to: ‘How do I rebuild?’

If you focus on that, all the other stuff will fix itself. And this is the good news part – you absolutely can rebuild. It’s not as hard as you think it is either, as long as you take things one step at a time.

So, first step: what do you want your future to look like? It sounds like you want to buy another home and build up some savings. Second step, how are you going to do that? Make a plan, Harry. Yours will be more nuanced than this but here’s where I’d start.

Budget

Get a piece of paper, open a blank spreadsheet or download a budgeting app. Whatever works for you.

In one column, write down your income (the cash that lands in your bank account each month as opposed to your overall salary). In the other, write down everything you spend money on each month. Round these bills up to be on the safe side.

Hopefully you’ll have a bit left over after the essentials are paid for. Leave some of that for the nice stuff – a holiday, day out with your son or going to the football-type stuff – but be strict with yourself too. Can you go without whatever it is?

Change your mindset

As someone who is completely addicted to drip-spending on Vinted, I’m only too aware how easy it is to spend money now. Online shopping and apps where you don’t even need to put in your payment details have absolutely nailed us to the mast of consumerism.

Take a breath when you find yourself about to hit pay. If it’s something that can wait for 24 hours before you buy, put the phone down. Wait. You’ll be surprised how quickly you’ll have forgotten you almost bought something you didn’t need.

Start saving

That thing you didn’t buy would have cost £15. You didn’t spend it so you can afford to part with that money. Put it in a cash savings account – ideally one that is entirely separate from your current account.

If you’re not a natural saver, this might feel like hard work. More good news! It’s not. If you’re someone who puts things off till later, acknowledge it and download an app that will help you save without even noticing.

There are so many apps, banks and building societies now that will let you round up your spending and sweep the difference straight into a savings account. If you buy milk, eggs and bread for £5.15 the app will automatically round that up and transfer 85p to your savings. It’s small amounts, but it’s constant. And it really does add up.

I’m a huge fan of Moneybox and Starling Bank but there are loads out there like Monzo, Cleo, Plum, Chip, and Revolut. It’s possible your own bank actually has something like it you’ve not noticed before.

Be specific and choose the right account

Have separate savings accounts for each thing you’re saving for. You’re hoping to buy a house and build up a rainy day fund.

Open two savings accounts – one easy access for the rainy day cash and the other a fixed rate savings account. You could even have a third for holidays and other fun.

You can now save into more than one ISA in a single tax year, so you’ve got the option to protect your savings and interest from going to the taxman. You can save up to £20,000 into ISAs each year – more than most people can afford to put away anyway.

You could also consider opening an investment ISA, also known as a stocks and shares ISA to put some or all of your house deposit savings in. Over a longer period of time, investing in the stock market and funds is likely to earn you more interest than keeping your savings in cash. The risk is that the value of investments can fall as well as rise, making it totally unsuitable for savings that you might need access to tomorrow.

For money that you know is going towards something you want to buy in maybe three to five years’ time, investing could help you boost that pot significantly. The value of the underlying investment can rise over time (or plummet, remember) but, more importantly, most investments pay dividends – cash, in other words.

If you invest this money too, it goes towards earning you more dividends that can be reinvested too. This is called compounding and it’s why investing is so powerful at growing your wealth.

Keep your chin up

You’ve had a rubbish time, clearly, Harry. Don’t be disheartened. Imagine how you’ll feel this time next year when you’ve got savings in the bank – good about yourself and good your future.

I’d also recommend finding out about some of the many ways to get on the housing ladder with just a small deposit. Do a bit of reading about shared ownership schemes, which allow you to buy a bit of a home and rent the rest until you can afford to buy a bit more.

Go find out about 95% loan-to-value mortgages, guarantor mortgages, mortgages that allow your parents or other family members to help you get on the ladder. Look online.

Finally, book an appointment with an independent mortgage broker. Sit down with them in a room and tell them what you want to do – most of them will help you work out how to get there and give you a good idea of how long it’ll take. And, they’ll often do it for free.

You’re embarking on quite an exciting part of your life. Time to get started.

Sarah Davidson is an award-winning financial editor and head of research at WPB.

Got a money worry or dilemma? Email [email protected]

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