Tips and tools to help you cope with financial change
Unfortunately, most if not all divorces are likely to cause financial change regardless of your income or wealth. Initial legal costs followed by households dividing mean there are now two sets of bills to contend with. This financial complexity can add to stress levels at an already difficult time. Here we outline available tools, advice and support that can help to make negotiating this important stage more straightforward.
Start thinking through finances early in the divorce process
Full financial disclosure and dividing up the household’s assets form an important part of the divorce process where you will start to calculate your future incomings and outgoings. During this time, you will also need to start considering spousal maintenance and child support.
It’s difficult to work out what your financial situation post-divorce will be until all the factors of your individual case are considered. Tools at online financial advice resources such as the free, UK government-backed MoneyHelper can give you a broad idea of what to expect from your future finances. However, no major financial decisions – such as a remortgage – should be made until your final settlement is approved.
Increase your understanding of your financial situation
If you haven’t been closely involved with managing your family’s money – or if you have but things have changed a lot – getting your head around your new financial situation can be yet another steep divorce learning curve. Now’s the time to get help – and don’t be afraid to ask questions, even you think they’re silly. (They’re not.)
There are many places where you can turn for advice and support
- Friends, family and colleagues can provide invaluable advice and guidance. As a recent divorcee told me, ‘The back-to-basics budgeting lesson my dad gave me proved to be one of the most priceless hours of my post-divorce life so far.’
- There are many podcasts giving advice on all aspects of divorce, such as The Smart Divorce Podcast with Tamsin Caine, a chartered financial planner and divorce specialist. Highly rated, it includes episodes on planning your finances post-divorce as well as insights about the family home, pensions, legal costs and more.
- Free financial information and advice sites include:
- Age UK – free advice and support for people over 50
- Stepchange – offers free, confidential advice on debt problems, budgeting and credit
- The Money Charity – a great resource for learning more about finances, which also offers workshops and webinars
Create a budget or spending plan
Although it can feel daunting, it’s important to take a clear, honest view of what your new life circumstances will mean for you financially. The money that supported one household now needs to pay for two so you’ll have to adjust accordingly. Once your divorce settlement is finalised, it’s good to take some time, perhaps with help from a friend or family member, to create your new household budget. Living on a budget fills many of us with a fear of having to deprive ourselves of things. However, it’s just a simple way to ensure you’re spending a bit less than you’re bringing in each month – and it can actually help emotionally too.
At a time of change and uncertainty, sticking to a budget will give you the peace of mind that comes with knowing you have the essentials covered, while allowing you to spend ‘guilt-free’ on those little treats.
Create a long-term plan for managing your money
The medium and long-term financial changes which come with the end of a relationship are significant so it’s helpful to get some financial advice. The free advice hubs outlined above will help, or you may feel you want to get some professional input.
An Independent Financial Adviser (IFA) can help you with pensions and investments, life and health insurance, housing and mortgages. They can also support you in managing your finances for the long term, or towards specific goals, such as retirement.
If you don’t know where to start with finding an adviser, it’s always good to ask for referrals from your friends, family and colleagues. You can also look on a comparison site such as Unbiased which has a database outlining different IFAs, their areas of expertise and their charges. The Financial Conduct Authority has a Financial Services Register where you can make sure your adviser is fully registered.
If you’d rather work things out yourself, there are some great apps available to help with budget planning and saving. Three of the most widely recommended are:
- Moneyhub – this app combines all your existing finances including bank accounts, investments, credit cards, and savings accounts in one place, providing you with insights to help you budget effectively
- Plum – more of a savings-focused app which links to your bank account and uses algorithms to calculate exactly how much you can afford to save
- Emma – a good option if you’re struggling to manage debt, Emma pulls data from all your accounts, including credit cards, current accounts, credit accounts, savings, investments, and pensions, and can highlight areas to help reduce debts
