Financially Preparing for Divorce
When thinking about separating or coming to the conclusion that a divorce is the only option, many people worry about their finances. Whether that is how they will survive on their own, what their living costs will be or how to even tackle untangling your joint finances. There are some things that you can do to financially prepare for a divorce, that will help you to gain clarity and feel more confident when financial discussions take place around your separation.
In many relationships, there is one person who tends to have more of a handle on the finances. They are the one who knows how much is left on the mortgage, how much your insurances are each month, who all your utilities are with and manages the paperwork and filing. This can leave the other person in the dark about the family finances and make going your separate ways quite intimidating.
So, if you are considering divorce or are in the early stages of separation, what can you do to be more financially prepared?
Understand What you Have
You will need to know what assets you have and their value. Start to gather your paperwork together, so that you know the outstanding balance of your mortgage, any investments and savings that you have, pensions, and ideally determine what both you and your partner earn. Financial information must be disclosed when divorcing, however, it is best to have a good understanding for yourself.
Know Your Outgoings
This is a very useful task to undertake for anyone, whether you are getting divorced or not! Create a spreadsheet or just a simple list of all your outgoings so that you can clearly see where your income goes each month and your affordability. Include any debts, car finance, credit cards, household expenses and personal expenditure such as phone bills, fuel and any regular outgoings.
Protect Your Credit and Improve Your Score
Review your credit report (you can get a free credit report from websites such as Experian or ClearScore). See what you can do to improve your credit score and establish credit in your own name if you haven’t already. A good credit score will be crucial for renting, taking out a loan or purchasing a property on your own.
Start Cutting Back
If you know that you will soon be going through a divorce, it is a good idea to start being more stringent with your spending. This will help you to adjust and allow you to put yourself in a stronger position.
Locate Key Documents
Make sure that you have an organised and up-to-date filing system. This can be tricky if you have your accounts or bills in different names or online. So, spend some time finding out how to access all your accounts.
Create an Emergency Fund
If you are thinking about leaving your partner, it is a good idea to start to build your own financial cushion or emergency fund. Especially if you are privately seeking some legal advice and don’t want your partner to know yet. Create a separate savings fund for any personal expenses so that you can manage any unforeseen costs.
Get Professional Advice
There are numerous people who can help you get to grips with your finances and legal position. Consider speaking to a financial advisor, an accountant or a debt advisor (if you have large debts) to get clarity on your financial position. A mortgage broker or bank manager can help you understand your affordability, if you are concerned about affording your own property following divorce. And a family solicitor can discuss your legal options when it comes to separation, property, children and finances.
Support Through Divorce
Divorce is a big decision, and it can be a terrifying one if you are financially dependent on your partner or are uncertain about your family finances.
A Court will look at all the factors when making decisions about how finances are split. So, try not to panic if you are not the breadwinner or feel that you will not be able to survive on a single income.
Aside from preparing yourself financially for going your own way, it is important to seek support from friends, family or professional advisors and take good care of your mental wellbeing.
Need Legal Advice on Divorce?
Our friendly team of family solicitors are on hand to guide you through the next steps. We offer fixed fee packages, flexible payment plans, and legal aid may be available to cover some or all of your legal costs.
To make an initial appointment, or to speak to someone today, please call us on 03444 124 348.