Are you wondering how to get a handle on your finances after divorce?
One of the biggest challenges you’ll face when you get divorced is how to get on top of your new financial situation.
No matter what your previous financial circumstances they will almost certainly change, at least to some extent.
You might have to work longer hours, pay more bills living on your own, or get supplementary income as part of support payments from your ex to help with caring for your children.
Here are some key steps you can take to help you get a handle on your finances following your divorce.
Get Advice Before Dividing Your Assets
Divorce is possibly one of the most traumatic and emotionally draining processes one can ever go through.
Moving house and taking care of children in this frame of mind are stressful enough, but when one also has to decide on the splitting of assets and finances, it is so easy to become overwhelmed.
Whether you choose to divorce through the Court or through divorce mediation, it is strongly recommended to seek financial advice before attempting to divide your assets.
Document All Your Assets & Debts
In order to get a handle on your finances after divorce, the first thing would be to do a financial stocktake.
All assets – cash or otherwise – and liabilities must be documented before any financial plan can be put in place.
You may have been relying on your ex-spouse to handle the finances during your marriage and you may find this task daunting.
Do not hesitate to seek professional financial advice; there is far too much at stake here.
Get Your Paperwork Together
All paperwork, such as bank statements, investments, insurance, loans, mortgage/rent, credit card debt, utility bills, salary slips, child support, superannuation, etc., must be gathered immediately after the divorce.
Only then could you or your financial advisor start to make a plan to build your new financial life.
Make a New Budget
Making a budget will give a clear indication how much money you need to survive and where it will go.
Learn To Live Within Your Means
Life after divorce usually comes with lifestyle changes for the entire family and now both spouses must learn to live within their changed means.
The best way to do this could be to separate your needs from your wants and cut out unnecessary expenses, until your situations change.
If that doesn’t quite cut it, then the other option would be to find a way to earn extra income.
Create A Plan To Repay Any Debts
Getting rid of your debt should be a priority, particularly credit card debt, which is by far the most expensive.
It’s nice to buy things you want, but not by spending money you don’t have. Financial discipline will be tested here, if you really want to become debt-free, so plough any extra cash into your debts until they are paid off.
Decreasing spending limits or downsizing your home or vehicle may also be positive steps.
Update All Your Accounts
No matter how amicable your separation may have been, ensure your financial security by immediately updating all your accounts, loans, vehicles and changing all pin numbers, including your email account.
Also ensure that your name is removed from any debt or loan that may not have been done jointly.
Update Your Family Status With Centrelink
You may also be entitled to some tax benefits or support payments from Centrelink to help you get through the initial transitional period.
These benefits come in several different forms of government subsidies. Find out about payments and services for separated parents from Services Australia here.
Think About Your Property Settlement
If you have a mortgage, talk to your bank about any possible benefits of settling it.
This could be done before the divorce becomes final and could form a part of the overall settlement.
Update Your Estate Planning
It goes without saying to review your estate planning and make all the necessary changes to your will, immediately after the divorce. In the aftermath and chaos of the separation, this vital point can easily be forgotten, sometimes with grave consequences.
These tips will help you to get a handle on your finances after your divorce.
Ready to move on from your relationship? Divorce mediation makes the process less stressful, faster and more cost-effective than going through the Family Court.
Get in touch with Ian now for a confidential obligation-free discussion about your circumstances and find out how mediation could help you move on.