The end of a relationship is always difficult. Whether a breakup or a divorce, a separation is an emotional, stressful and nerve-wracking time of your life. Your mind is plagued with a thousand worries.
What went wrong? Was it my fault? Will the kids be okay? Will I find love again? A thousand worries except money. However, this needs to be a priority.
For most people, worrying about finances when their marriage is falling apart sounds neither possible nor right. “Can’t the money matters wait until the final separation?” Yes, they can. However, it is best not to delay it that long, start financial planning as soon as possible.
This will ensure that your tough time does not take a toll on finances, or your finances do not contribute to making an already stressful time, more difficult. With timely financial planning, you can take control of your day-to-day spending, income, debts and overall expenses. This will not only smooth the divorce or separation process, but minimize the sting of the nasty process as well. It will also safeguard the financial independence and stability of you and those who depend on you.
5-step financial planning for divorce and separation
Reorganization is a good place to start
Revisit your financial plans as a couple and take note of the joint accounts or co-owned properties and other financial assets you shared. Freeze such accounts and separate the property. You can talk to a lawyer for help on this matter. Change passwords and pin numbers associated with personal accounts because chances are, you may have shared the information with your spouse. Open new bank account with sole ownership rights, if need be. Do this even if the two of you are just separating and there is a possibility or hope of reconciliation.
Manage your debts
If it is a separation, the two of you will have to keep making payments on joint debts, such as mortgage on a co-owned property, or credit card debts on joint bank accounts and so on. Apart from dutifully handling your part of the debt, also check that your spouse is handling their part well. You can conduct monthly credit checks to ensure bills are getting paid, and debt repayments are being made regularly. This will also help you ensure you are not paying for their spending sprees.
Sort the property
Start with the one you are currently residing in. If it is a rental, you may want to revisit the rental agreement and decide accordingly. If it is a property you owned, either alone or with your partner, talk to your lawyer about your state’s policy of dividing homes and other assets between separating or divorcing couples. Make a list of paperwork that will be required and get your papers in order.
Sort daily finances
Figure out if the divorce or separation will cause a change in the household income. Work out the finances to see how this change will affect you. Things to consider in this regard include, power and phone bills, insurance policies (include life insurance, health and home insurance, property and car insurance), credit card bills, store card bills, tax records, bank statements, investment records and other financial commitments that affect your daily and monthly finances. Create a journal to note down your daily expenses, monthly income and see how much savings you can make per month. Remember to include increased overhead costs because expenses will soar after the split.
Plan for the future
And finally, begin planning for the future. You want to think long-term and plan for buying a new property, saving for kids’ education and creating or updating a will. Speak to your lawyer about making new financial investments, purchase new policies and the like. The idea of this planning is to know and use efficient methods of saving up for the future.