Financial Tips for Divorcees

The majority of common-law and married couples have shared assets.  These include owning a home together (72%), joint bank accounts (64%), joint credit cards (52%) and a joint Financial Plan (64%).

So how do you regain your financial independence after the break up?

With divorce proceedings taking longer, 21% lasting more than two years, it makes it even more challenging for those trying to get back on their own two feet.  “Many people aren’t prepared for the costs associated with divorce and how their lifestyles may change afterwards,” says John Tracy, senior vice president, TD Canada Trust.

Here are five tips to help those new singles re-establish their financial stability;

1.       Get Started.  Know your current financial position; you will need to divide the assets and liabilities you and your partner owned together, and figure out what liabilities you will be responsible for.

2.      Re-evaluate goals.  If you partner was the one who took care of the money related decisions, it’s time to get a handle on the household finances and adjust your investments accordingly.  Work with a Financial Planner to create your own Financial Plan; this will ensure you achieve your short and long term goals.

3.      Focus on building wealth.  Set up a pre-authorized transfer of monies from your bank account into your RRSP or TFSA.  If you can’t afford a lot, look for an investment that has a low minimum to get started.  Make sure the goal is on investing and not just saving, everyone has a different risk tolerance so pick an investment that has the right mix of safety and growth for you.

4.      Review your Insurance Policies.  Many couples get joint life insurance policies to save on premiums, but now you may need to split the policy or get your own.  You may also want to look at a Critical Illness or Disability policy to cover expenses if you were unable to work for a period of time due to illness or injury.

5.      Track your progress.  Review your Financial Plan on a regular basis; as your new life evolves it will need to be updated and changed.

Now that you are single your priorities will change, ensuring your financial stability should be at the top of your list.  If you need help creating a budget to get started, or revising your current Financial Plan; don’t hesitate to give me a call.

Have a great weekend,

Tracey

 

Source:  Advisor.ca