It’s a subject that no happily married person wants to consider too deeply, but the fact is that lives do change, people can grow apart, and relationships break down. Sometimes, despite the very best intentions, there is no other option but to separate permanently and file for divorce.
This is one key time in your life when all the financial decisions you had made can be turned on their head, and you really need to take a fresh look at the situation you now find yourself in.
If you have been working with us already as a lifestyle financial planning client, you will be familiar with our bespoke financial forecasting software that enables us to programme in all the financial variables, along with scenarios based on what you want your future to look like, and project the financial impact that these will have on each other. Should you now be facing a divorce, these scenarios will likely be very different, and so too will be the financial figures that were used to project them.
Life throws us curveballs, but the important thing is to keep our heads out of the sand and factor in exactly what these mean for us:
Financial independence
For some, financial independence following a divorce can be absolutely terrifying; for others, it can be extremely liberating. The crucial thing is to accept responsibility, start budgeting (if you didn’t already) and be realistic about what you need, and what your outgoings are now likely to be.
Make the most of being able to save
Relying on one, rather than two incomes, don’t necessarily mean you will be worse off. You may be eligible for a 25% discount on your council tax if you are now living in single-occupancy accommodation, for example, and there will be one less mouth to feed, body to dress, etc.
… but remember that some things will now cost more
Unfortunately, some costs will increase as a result of your separation. If your partner was the sole breadwinner, you may have less spare money than you are used to. If you shared a car or transport costs, then this can be an added burden to face alone too. Whatever happens though, focus on the fact that knowledge is power and with a budget and a realistic idea of what day-to-day living costs, you will hopefully be just fine.
Update your will & expression of wish forms
If you are getting a divorce, you really need to get your financial affairs in order. Wills are often made once and then overlooked or forgotten about, but if your divorce changes who you would like your beneficiaries to be, then you really need to address this and get your will updated. Pensions, death in service benefit, life insurance and anything else where your partner was set to benefit should be looked at too.
Insurance and protection
If your partner’s name was on your house, car or any other insurance, you need to get this changed. You might also wish to take out additional protection policies you may not have previously seen as needed. If you were to become unable to work, for example, the adequate insurance could cover the shortfall in income that your partner may been able to cover previously.
Retirement planning
You only get one life, but you get as many opportunities as you wish to start it over. Divorce can make or break a person so try to focus on the positives that it can bring. What do you want your future to look like? If you don’t know, then one of our lifestyle financial planning specialists can help you to figure this out. Once you know, we can advise you on how to make this happen.
To speak to us about lifestyle financial planning, or about getting your retirement plans and savings and investments in order following a divorce, please get in touch.
This article does not constitute financial advice and should not be construed as such.