After you've extricated yourself from any loans, bank accounts, and credit cards you may have shared with your ex, you can turn your attention to building up your assets and financial security. Here are three ways to prepare yourself for a fearless, confident future:
Updated September 23, 2008
Build an emergency fund. Okay, so you're still feeling raw and maybe a little scared to go solo. Focus on giving yourself a security blanket. Figure out how much you would need to live on for eight months, and then sock that amount away in a savings account. Once you have those savings, you'll be taken care of no matter what happens—a layoff, a loved one's illness. If you received a payout in the divorce, you may have your peace-of-mind fund already. If not, don't stress. Just set up a monthly direct deposit—have the money transferred from your checking account into a savings account (EmigrantDirect.com, with a 3.5 percent interest rate, is a great place to store your cash).
Get the match. If you work for a company that offers a 401(k) or 403(b) retirement plan and kicks in a matching contribution, you must join and contribute enough to get the match. I've said it before: That matching contribution is no different from a bonus. If you find your plan's menu of fund choices intimidating, see if it offers an all-in-one fund (it's typically called a life-stage fund). This is geared toward your age and will have a mix of stocks and bonds appropriate for you. If there's no such fund, look for an index fund that mimics the performance of a large basket of stocks, such as the S&P 500 or the Wilshire 5000.
Fund a Roth. If your income is below $101,000 a year, you're eligible to fully fund a Roth IRA (this year you can put in $5,000 if you're under 50 and $6,000 if you're 50 and over). Assuming you have at least 10 years until you retire, a no-load index mutual fund, such as the Vanguard Total Stock Market Index Fund, is a great choice. You don't get a tax break when you invest in a Roth, but when you retire and pull the money out, there will be no tax on your contributions or your earnings. So think of your Roth as a standby emergency fund.