Life after Divorce - The new financial you

Happy New Year to my followers; welcome to 2018! I hope you all had a relaxing festive period, surrounded by loved ones and friends.

It’s a brand new year, which means brand new opportunities to try new things, brand new opportunities to travel to new places, and brand new opportunities to make those long overdue life improvements you’d been putting off - we all have them!

In light of my positive new year's vibes I have thought long and hard about what subject matter to write my next article on. This new year's article needs to start with a bang. So I decided to start the year by writing about divorce ……… yes that’s right, good old fashioned and festive-induced divorce. Just bear with me, it's going to be ok I promise.

For as we know, divorce doesn’t have to mean the end of life as we know it, the opposite in fact. Divorce is clearly devastating for all involved, especially any children affected. It also has the potential to be financially devastating, with many people losing half (or indeed more) of everything they’d saved and built up until that point.

But once the dust has settled your divorce may just have presented you with the opportunity you’ve been secretly crying out for, an opportunity to start the next phase of your life journey, a life transition like no other.

However before any new journey begins, and certainly before you start this challenging life transition, you first need to get prepared. And like all good cub-scouts and girl-guides today’s article explores how best to 'Be Prepared'.

1. Don’t panic Mr Mainwaring!  

In true Dad’s Army style, don’t panic! The worse thing you can do is waste time worrying as it won’t help, it truly won’t.

Consuming your precious time and energy over-thinking and panicking is not the solution. Instead, try your best to keep calm. Try to accept what has just transpired.

Understand that you are in control of your life, no other person is.

Accept the cards that have been dealt and realise that you are holding the aces if you can just look past the haze.

2. GET YOURSELF ORGANISED!

If you’ve read an earlier divorce article you know what I’m about to say - 'Fail to prepare, Prepare to fail!'

If prior to your divorce you didn’t follow my advice about preparation don’t worry, there’s still time.

Start by making a list of all of your assets, debts, tax returns, bank statements, investment accounts, credit card bills, insurance documents, pension statements, mortgage liabilities and any thing else that's connected to your financial base.

On a sheet of paper, or trusted Excel spread-sheet, make a line entry with the type of account, amount, who owns the account, and the contact information at each institution. It’s amazing how empowering it is just to have one place to go to in order to get an overview of your finances. Knowledge is power. Take advantage of it.

Then, order your credit file if you haven’t already. There are a number of free online sites you can do this through, such as  https://www.equifax.co.uk/ or  https://www.clearscore.com/.

If you're unsure on what some of the information you hold means (like a pension statement for example) then engage in the services of a competent and professional expert to help explain what it to you.

You may or may not understand how finances and investments work right now, but that doesn’t matter. In time, you will improve your knowledge.

3. Budget, budget, budget

Word of the today – budget. As mentioned above it’s important to list all of your incomes and expenses. This is a priority.

After a marriage split, it will inevitably may take time to re-adjust to your new income/expense lifestyles. The issue you face here is that it is at this exact moment that many dig themselves into debt. This includes high earners who may have been used to a higher income/lower debt ratio than they face today. Do not let this happen to you.

If, like many, you currently have no idea what you spend your money on each money each week you better start to learn, and the best way to do this is via a number of different mobile apps, or in recent times mobile bank account providers, such as  https://www.starlingbank.com/ and  https://monzo.com/.

Keeping track of your finances is the most important piece of financial information you have. With it, you’ll know if you need to cut back or if your situation is stable.

4. Are your accounts set up correctly?

Remember the days of having a joint will, joint bank accounts, joint savings, and joint insurances with your ex-spouse? These days are now long gone and you need to make sure your accounts have changed accordingly.

If you are divorced, your legal representative (or your financial planner) can help to advise you on how to take title to your accounts and also, who the beneficiaries should be on your accounts. The creation of a new will is also in order, with your previous will now being invalidated.

This topic is especially important when it comes to dealing with your pension and retirement savings. Making sure a new death benefit nomination form is completed, with revised beneficiary details, is a must. Contact your pension providers to ask them to facilitate these changes, typically through you completing a new death benefit form.

5. My priorities are as follows ……….

Right now you might be feeling as though everything is coming at you all at once. It’s getting a bit crazy. You’re feeling overwhelmed. You’re beginning to get a little anxious. Sound familiar? 

If, following point 3 above, you determine that you don’t have enough income to balance your monthly budget, than your budget has to become your very first priority.

If however you (and your children, if you have them) are dependent on your ex-spouse for continued maintenance support, make sure they’ve taken out life insurance and named you and the children as beneficiaries. This point should have been covered off by your solicitor ahead of your divorce but if not, get on it immediately.

If neither of the two points above impact you, then what does? What do you want to focus on? What steps do you want to take to leap ahead into your new life transition?

I personally love a good list. So why don’t you make one yourself? List down your top 5 objectives for the coming year. List more if you have them. Then tick them off each time you achieve one.

6. TEAMWORK MAKES THE DREAM WORK

As written in an earlier business planning article, making sure you have the best advisory team around you is worth its weight in gold.

Putting yourself back together financially can be heavy lifting work if you do it alone. So don’t. If your situation requires it, don’t be shy about getting expert tax, legal or financial advice.

The best way to do that is to ask for referrals from people you trust. Or, if you don’t want to discuss things with friends, look out for local experts or ones that write articles such as this one .... :-)

Seriously though, make sure your dream team empowers you and makes you feel comfortable with the decisions you are making. It’s their job to make sure you fully understand what they are proposing, what its outcome will be, and why.

7. Never stop learning

By understanding and then balancing your budget, through to the creation of a priority list, and your newly assembled advisory team, you’ll have learnt a great deal more about finance than you did at the beginning.

The trick is to then keep the ball rolling along the pitch towards your goals. Make sure you keep on top of each element. Make sure you talk to your advisory team. Read more. You’re never too old to learn something new.

8. Financial Plan your way to a new life

Financial success only happens if you take the appropriate steps, at the right time, and by sticking to the plan.

Following a divorce the first steps to follow are outlined above in this article. By following these actions points you’ll be well on your way to securing a solid financial footing. 

The next step is to then create a tangible financial plans for yourself. I would recommend you do this through a trusted, and perhaps local, chartered financial planner.

A competent chartered financial planner, one that truly focuses on you and not product selling, will be able to create a financial plan bespoke to you. A plan that will bring your financial goals to life, which alongside their strategic advice, will show you how best to secure your goals (or your version of financial independence) as quickly as possible, and critically, how to make sure your money outlives you once you’ve retired.

Of course, if you already have a financial plan, that's great news. You simply need to update it to reflect the recent changes in your life.

In summary

This article and the steps within will not change your life overnight. I repeat, this is no quick fix.

However, it’s all pretty straight forward, once you’ve calmed down from the emotion that is divorce. The life transition placed in front of you is seen by many as a blessing in disguise. It may provide you with the boost in life you’ve been looking for. The new start. A new beginning. For you perhaps it may not. There's no right or wrong here.

Just make sure you take time over the decisions you have to make. Surround yourself with the right type of people; people you trust. Remove those people you no longer trust. Put a financial plan in place; your plan.

The end is not in sight, there is still plenty of time to find happiness, and there’s certainly still time to build your version of financial independence.

So what are you waiting for ……..