Financial Planning

How To Sort Your Finances After A Divorce: 8 Tips

How To Sort Your Finances After A Divorce: 8 Tips

Divorce is almost never pleasant. People often feel that there’s enough emotional upheaval going on, without bringing money and finances into the picture. Yet bring them in, you must.


Your financial position following a divorce is hugely important, as it will affect your lifestyle, income and expenditure for years to come. If you have children or dependents, it’s even more important to get things sorted out.


Getting your ducks lined up as best you can will help put you on the best possible financial footing. Hopefully, this will also therefore make what is a hugely difficult time a little bit easier.


Ideally, we recommend speaking with an experienced, qualified financial adviser (and solicitor) prior to any divorce proceedings.


This is often when clients choose to approach us, for instance.


Yet there are also individuals who only approach a financial adviser AFTER their divorce has come through.


If you find yourself in this position, here are 8 tips we hope you find helpful:


#1 Close Joint Accounts.


Ideally, you will have done this already. Yet it can be one of those things which slips through the net, as people get caught up in the emotional whirlwind of their divorce.


If you have not already closed your joint accounts, therefore, make sure you close them as soon as possible. They remain joint liabilities as long as they are open, and the last thing you need is your ex-spouse building up huge debts or charges on a joint account.


#2 Change / Update Insurance


In all likelihood, you and/or your spouse will have taken out insurance during your marriage to cover you both (e.g. car insurance, home insurance, life insurance etc.).


Make sure you update your insurance documents, and pay particular attention to your home insurance terms. For instance, if your ex spouse received any of the items covered by your insurance under the divorce terms (e.g. jewelry, artwork, collectibles etc.), then it makes no sense to keep paying to cover them.


#3 Open New Accounts


In general, we advise against getting into most forms of debt (obviously, mortgages can be an important exception).


However, post-divorce can present specific circumstances where it might be necessary to use a credit card in the short term, as you get back on your feet. Particularly if you’re lacking on any savings or emergency funds from which to draw.


If you had joint accounts like this for emergencies during your marriage, then make sure you close them. Consider opening new, individual accounts to replace them.


#4 Build An Emergency Fund


We offer point 3 tentatively, and caution great discretion before taking out any form of debt. By far, the better solution is to lean on savings in the short term as you reestablish your life.


As things stabilise, your income and expenditure should become more comprehensible and predictable. From here, it’s vital that you start to build up an emergency fund.


Often, married people have more of an economic safety net. If you both were working during your marriage, for instance, and one of you lost your job, then hopefully the other person would have been able to cover things financial whilst you found a new job.


When you are single, however, you do not have that safety net. So it’s even more vital that you build up, say, 3-6 months’ of expenditure, in case you lose your job or are unable to work.


#5 Re-title Assets


After divorce, it is likely that there are many assets in both your’s and your ex-spouse’s name, which now need re-titling.


An example might be your house. If you owned this in trust with your spouse during your marriage, for instance, then you should consider re-titling it in your name.


#6 Create A New Financial Plan


Many people worked with a financial adviser with their spouse during their marriage, to devise a joint financial strategy to achieve their joint financial goals.


Now, obviously things have changed and that plan is not longer appropriate. It is therefore a good idea to sit down with your financial adviser, and devise a new financial plan in light of the new financial goals you are likely to have.


For instance, it may be that you now have different plans for your retirement. Or, perhaps your financial position has changed, which requires a re-think of your previous plan.


#7 Update Your Passwords & Logins


If you shared passwords with your spouse to sensitive logins or shred devices, then consider closing them or changing the password.


For instance, if you shared a joint email address with your ex-spouse, then consider what you want to do with it. It’s important to protect your personal data.


For example, some malicious ex-spouses might use a login like this to harm you, sending a damaging email to your joint contacts as if it came from you (to paint you in a bad light).


On a more innocent level, your ex-spouse might simply lose the login during a data breach. For instance, a hacker could steal the login from their computer, which could come back to haunt you.


Don’t leave anything to chance. Close the account and set up a new one just for you


Likewise, if you both shared a PC or Mac and you are not keeping it, then wipe any personal files from it. Clear the internet history, cookies and any cached files in the browsers which could contain personal information about you.


#8 Create A New Filing System


There is probably no better time than now to have a thorough clear-up of your filing system.


You will now have a growing list of new documents, files and policies which need organising. By creating a new filing system, you can access the data and information you need in the future, quickly and easily.


It also can be a therapeutic and psychologically-beneficial exercise, too. Many people say that creating a new filing system helps them draw a line under things in their minds, and helps them take a few more positive steps forward in moving on with their life.


In summary, this is an unpleasant topic – undoubtedly. Yet no matter what happened, you deserve to move on with your life. It also helps no one for you to fall under financial hardship. We therefore hope this guide helps you rebuild things, and give you firmer financial footing on which to stand in the years ahead.


As always, if you wish to speak to us about your financial situation prior to, during or following a divorce, then our friendly, experienced financial advisers are here to assist.


Posted in Financial Planning