Feb 28, 2019
Going through a divorce is not only emotionally challenging, it can be financially crippling too.
Managing your budget and wealth goals can be a complicated task in itself, let alone when going through a divorce. Not only are you hurting emotionally, but are now having to deal with the financial complications that come with separating from your partner.
But all is not lost.
By seeking professional help to create a divorce financial plan you can save yourself that stress and ensure you get the best possible financial outcome during this challenging time.
Here’s some tips to help get you back on your financial feet.
Take note of all your spending, even if very early on in the separation process. Learn everything you need to know about your financial position and start gathering as much information as possible including credit card statements, tax returns, home loan information, key bills etc.
Make sure you are keeping all bank statements and evidence of transactions and take note of all your account numbers. Access your pay slips and make copies. The more information you are able to gather, the easier the process will be when working with your team of experts – e.g. a family lawyer and financial adviser.
Close all joint accounts
Terminating all joint accounts will help protect you from financial liabilities. This is the most important step and should be top of your priority list.
If your former partner has any debts, you also will be held accountable for them until there is a legal agreement stating otherwise.
Keep track of where your money is. Open credit accounts in your own name as soon as possible so you have independent access and control of your finances.
And another quick tip - don’t forget to change all pins and passwords that your former partner may have access to.
Make sure that all types of insurance (home, life, health etc.) are cancelled or moved into your own name. This will prevent any future mishaps and ensure you are covered when you probably need it most!
Make sure you remove your former partner as a beneficiary of your life insurance – this will save your family from any legal battles if something does happen to you in the future.
Talk to your financial adviser, who can help the insurance transition process and ensure that you are not under-insured throughout this process.
Adjust your goals and your budget
A change from a double income to a single can be a shock for many people going through a divorce. You will have to start prioritising things that you need over things that you want – such as buying new clothes or expensive meals. With legal fees, a mortgage and all the costs that come with kids, it can be hard to keep track of your expenses.
It is important to set new financial goals. Think about how you would like your new life to look, and then map out the steps you need to get there.
Start by making smaller, more realistic goals that are reachable but can still have a positive impact on your savings and finances. For example, your goal could be saving a $1,000. Remember, each smaller goal will help you reach any slightly bigger goals you make.
It is crucial to seek professional finance guidance as early as possible into the divorce process.
This includes a reputable family and divorce lawyer, who has credibility and a transparent fee structure.
A financial adviser is also a key person that you’ll need to rely on. Not only will your adviser help you through the financial challenges, but they’ll also set you with a plan to re-build your wealth and prosper.
Written by Ben Calder, Private Client Adviser at Calder Wealth Management.
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