Going through a divorce can be hugely stressful for a wide range of reasons. Obviously, it means a total change to the life that you know and it means losing someone that has played a huge part in your life. If you have children, the whole situation can be even more stressful and difficult. However, one other area that divorce can have a huge impact upon is finances.
After you go through a divorce, it is important to gain control over your finances as quickly as possible. Separation from a significant other is hard emotionally and most of the time financially too. In this article, I will talk about some of the great personal finance advice that will help you through the hard times of moving out of a shared house and separating your finances.
Tips that can help you to regain control
After you have moved out of the marital home and the divorce has gone through, you basically have to assess the situation from scratch. Remember, if you were both working when you were married, you will have also lost an income as well as a partner. You, therefore, need to go through your finances very carefully to ensure you can get back on track as quickly as possible. Some of the steps to help you regain control include:
- Start sorting out your finances as quickly as possible: Of course, divorce is a stressful time and many are tempted to wallow in sorrow and depression. However, it is vital that you are proactive and that you start sorting out your finances as quickly as possible. Don’t waste time putting it off over and over again, as you could quickly find that it becomes impossible to get yourself sorted. Acting quickly is essential in getting your finances sorted following a divorce.
- Determine what your financial goals are: As part of going through your finances, you need to look at what your financial goals are over the long term, as the divorce may have changed many of these. For instance, you may need to set a goal to get some money into savings, to set up your own pension, and for purchasing your own home if you are renting. By working out what the long terms goals are, you will be better equipped to sort out your financial situation. There are plenty of resources that can help you with this, including a range of expert financial advice books that are ideal for those who have gone through a divorce.
- Checking on your outgoings and income: You should make sure you sit down and go through your income and outgoings carefully. This may have changed dramatically now that you have moved out of the marital home. You need to know where you stand financially before you can start making appropriate changes and plans to sort out your finances. Use personal finance software to help you to list, track, monitor, and calculate your income and outgoings, as this will make the task far easier for you.
- Allocate funds: Once you know exactly how much will be coming in and what your new outgoings are, you need to allocate any available funds. So, once you have accounted for bills, food, rent/mortgage payments, and other essential costs, work out what you have left. Ideally, you need to split the remaining amount between saving and general spending. Now that you are on your own, putting money aside for emergencies is important.
- Consider your options with regards to debt: You may find that now you have moved out, you are left with a lot of debt that you cannot manage on your own. If this is the case, you need to take steps quickly in order to resolve the situation. Seek advice from debt advice agencies if you are unsure what to do, as they will be able to determine the best course of action based on your individual circumstances. If you can still afford to make the debt repayments, that’s fine. However, if you are going to struggle with them, the quicker you act the faster it can get sorted out.
- Reduce your spending: You also need to find ways to reduce your spending. When you had two incomes available, you may have become used to treating yourself or spending a certain amount of money on various things. However, now that you are down to one income, this has to change to reflect the drop in the amount of money coming in. Go through your budget to determine where you can make cutbacks. Even if the cutbacks are only small, they will quickly add up and could make a big difference to your overall financial situation.
Making changes to start living within your means following your divorce
After the divorce, one of the key things you have to do is to start living within your means. Your financial situation may have changed dramatically following the divorce, and as such as your spending habits and lifestyle will have to change accordingly. It is important to ensure that you minimize on spending so that you are not spending more than you can afford to each month. It is also important to make sure you try and save a little money each month, as you will have to rely on yourself if you come across any financial emergencies.
There is no doubt that the divorce will have a massive impact on your life, and one of these is the huge financial impact that it can have. While the whole process is very stressful, being proactive with regards to sorting your finances can help. It will enable you to lighten the load and once your finances are sorted you can start focusing on other areas of your life. You simply need to ensure that you can continue paying your essential costs and that you look to the future in terms of your financial goals.
From Kostas Chiotis of financeblogzone.com