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Three Thoughtful Financial Tips for Dealing With Divorce
A divorce is one of the most challenging things you can go through as a family. It can have a significant impact on you and your kids. But, aside from the emotional strain, divorce also puts a big strain on your finances.
So, if you’re facing a divorce, it’s important you’re prepared for what’s to come. Not only will you have to split your assets, your household income will take a hit. You may have to deal with legal fees and child support. Any loans and debts will need to be managed.
Needless to say, whether you’re thinking about leaving your spouse or you’re currently going through a separation, there are a number of things to think about when dealing with the financial impact of divorce. Here are three tips to help you lessen the financial hardship and make the transition as smooth as possible.
1. Assess Your Current Financial Situation
Whatever the reason for your divorce, it’s bound to be an emotional time and it may be easier to bury your head in the sand than it is to think practically. However, you have to get smart and start assessing your current financial situation.
Write down your current family income and monthly outgoings. Then write down what you own like your home, your investments and your family’s personal assets such as your cars, furniture, artwork and other household assets. Finally, write down who you owe money to. Include your mortgage, your line of credit, your credit cards as well as any car loans. It’s a good idea to gather bank, investment, pension and loan documents to help you.
It’s also important to take stock of all of the current family benefits. Life insurance, disability and critical illness insurance, pension benefits, health and dental insurance, air miles and the cost of paying for the kid’s education, for example.
Once you’ve gathered all this information, pour yourself a glass of wine or make a cup of tea and take some time to take a close look at your finances. You’re going to have to work out how your cash flow, as well as your financial situation, will change. As a result, your lifestyle is likely to change and you need to regularly assess how.
Armed with this initial information, I recommend you make a “money date” with yourself at least once a week. It doesn’t have to be a big event. It just needs to happen regularly so you are on top of how the change in your life circumstances is impacting you financially.
By taking charge of your money, you’ll take charge of your life.
2. Get Financial Planning Help
One of the best ways to protect your finances during a divorce is to be prepared. Your divorce lawyer will help you with the many legal aspects that must be addressed. And, if there are children involved, a divorce lawyer also helps set the terms for child custody and child support.
Your relationship with your divorce lawyer will end once your divorce has been finalized.
Fortunately, there is one professional who can help you get educated on your situation and who will also be with you before, during and after your divorce is settled. That professional is your financial planner.
If you and your spouse currently have a financial planner you’ll need to decide if you can, or even want to, continue to work with them. Trying to share your financial planner may be a bad idea. It’s not impossible but you’ll need to decide if they will be able to represent your best interests. If you don’t think they will, now is a good time to find a new one. Family and friends can often make a recommendation for you. We also take on new clients and have helped many clients going through a family transition such as a divorce.
Your financial planner will help you organize your finances. They will help you project the results of your savings and investments post-divorce so you can see how well prepared you’ll be. They’ll also help you make decisions with your money including creating new financial goals and getting you back on track for the future
3. Focus on healthy living
Divorce can be all-consuming. A divorce will wear you down both emotionally and physically. If you are tired, undernourished, and just worn out, it will be difficult to remain intellectually and emotionally strong.
So now more than ever, try to focus on healthy living — get a good night’s sleep, minimize excessive drinking or eating, and try to take a 20-minute walk each day.
And, if you’re ready to abandon the process because it’s all getting too much keep the big picture in mind. Remind yourself what’s really important to you. The pain you feel is temporary. But, the decisions you make about your finances could have a life-long impact. By focusing on what’s important to you and giving yourself time to reflect could be what it takes to have a secure financial future after divorce.
Are you dealing with the financial impact of divorce? What challenges are you facing? How have you handled them?