Divorced and Self-Employed? Here’s How to Take Control of Your Finances Again

By Judd Allen, CDFA® Candidate

If you’re self-employed and recently divorced, you may feel like your financial life just got hit from two angles at once. You’re trying to keep your business afloat while adjusting to a new personal reality, often with fewer resources, more obligations, and an uncertain future.

This isn’t just stressful. It can feel like walking a financial tightrope without a safety net. But the truth is, you have more control than it may seem right now. You can stabilize, rebuild, and even thrive again - if you’re willing to approach things with strategy, structure, and a bit of patience.

Understand Your New Financial Reality

Divorce changes nearly every part of your financial life. Your household expenses likely look very different than they did before. Support payments, legal fees, or the loss of shared income might have narrowed your margins. You may have also divided retirement accounts or even business equity, depending on how your settlement was structured.

If you haven’t already, now is the time to step back and get a clear picture of what your new monthly obligations actually are. Start with the basics: rent or mortgage, food, utilities, insurance, support payments, and minimum debt payments. Add in the cost of keeping your business operational. This exercise isn’t about judgment. It’s about setting a new foundation you can actually build from.

One of the biggest challenges for self-employed professionals is variable income. Without a steady paycheck, it’s hard to know what “normal” even looks like. That’s why this baseline budget is so critical. It tells you what you need to earn - at minimum - to stay afloat.

Create Stability in an Unstable Income Stream

The nature of self-employment is unpredictable. Clients delay payments. Projects dry up. Revenue fluctuates. In the middle of all that, your personal bills are still due, and your financial recovery depends on consistent progress.

To reduce stress and regain control, try paying yourself a fixed draw each month. Look at your average revenue over the past year, then build a “buffer” account inside your business to smooth out income spikes and slumps. During strong months, you’ll bank the excess. In lean months, you’ll pull from that reserve.

This approach not only simplifies budgeting, but also helps you avoid the emotional rollercoaster of tying your self-worth to your income month by month. Treating your business as a separate entity - one that pays you like an employee - is a powerful shift.

It’s also a good time to revisit your client base and pricing model. Are you charging what your time is worth? Do you rely too heavily on one or two sources of income? Are your systems efficient, or are you losing hours to administrative clutter? Even modest changes to how you operate can free up time and money you need right now.

Get Serious About Tax Strategy

Many self-employed people approach taxes with a “hope for the best” mindset. That’s not sustainable in the best of times - and especially not after divorce.

You’ll need to revisit your tax filing status and understand how support payments are treated. For divorces finalized after 2018, alimony is no longer deductible to the payer or taxable to the recipient. Child support has never been deductible. These distinctions matter, especially when you’re calculating quarterly estimated taxes.

Work with a tax professional who understands small business ownership and post-divorce issues. Together, you can develop a system for tracking deductible expenses, planning for payments, and making the most of any retirement contributions or business write-offs available to you. Trying to figure it all out on your own while running a business and managing life post-divorce is a recipe for burnout - and avoidable penalties.

Rebuild Retirement Intentionally

For many people, divorce disrupts or delays retirement planning. You may have lost access to a 401(k), split assets with your former spouse, or paused contributions during the legal process. The good news is, self-employed professionals have flexible retirement options.

A SEP IRA is often the simplest way to restart your savings. It allows you to contribute a percentage of your earnings each year and is relatively easy to set up. If your business has higher income and no employees, a Solo 401(k) might be even better, offering larger contribution limits and loan features that can be helpful in emergencies. You can also contribute to a traditional or Roth IRA to supplement your retirement strategy.

The key is to start where you are. Don’t wait until you can “catch up.” Start small, automate your contributions if possible, and revisit your plan every six months as your income stabilizes.

Protect the Business - and Yourself

One often overlooked part of financial planning post-divorce is risk management. Without the backup of a spouse’s employer benefits or income, you need to ensure your business and your health are protected.

If you were previously on your ex-spouse’s health insurance, you’ll need to explore options. COBRA can work for a limited time, but is usually expensive. A health insurance marketplace plan may be more cost-effective. High-deductible plans with Health Savings Accounts (HSAs) can offer both affordability and a way to save for medical expenses tax-free.

You should also consider life insurance if you have children or are paying support. A term policy can help ensure your obligations are covered if something happens to you. And if you rely on your ability to work to generate income, disability insurance isn’t optional. One illness or injury could derail everything you’re working to rebuild.

Reevaluate Your Business Strategy

Once your financial foundation is more secure, revisit your business from a growth perspective. What does success look like now?

This might be a season where you scale back to focus on sustainability, or it might be an opportunity to pivot into more profitable work. You might explore new services, partnerships, or systems that let you earn more without doing more. Divorce changes your life. That doesn’t mean your business has to suffer. In fact, many people find that this period of forced reflection leads to breakthroughs they never would have considered otherwise.

Give yourself permission to ask, “What do I want this business to do for me now?” That question can lead to the kind of clarity and alignment that makes rebuilding not just possible, but deeply satisfying.

Surround Yourself With Support

You’ve been through a major life shift, and you're carrying a lot. Trying to navigate business, budgeting, taxes, insurance, and retirement all on your own is a heavy lift. Working with a financial advisor who understands the realities of self-employment and the emotional impact of divorce can help you offload some of that burden.

At J. Allen Financial, I specialize in helping people navigate this exact phase of life. We’ll look at your whole picture - from personal finances to business structure to long-term goals - and create a plan that makes sense for your life today.

You’re not starting from scratch. You’re starting from experience. And with the right tools and the right support, you can rebuild something even stronger than what came before.