Navigating Your Finances After Divorce
No one goes into marriage with the intention of divorcing but unfortunately it is sometimes part of life. Divorce brings forward a lot of changes, including to your financial life. Understandably this is a very difficult time but planning your financial future after divorce is essential, especially when children are involved. Here are some aspects that may need attention as you navigate this new chapter.
1. Create a New Budget
Divorce changes income and expenses for both partners, so it’s important to create a realistic budget. This will also give you clarity on your own income vs expenditure ratio so that you can plan how you want to approach your savings and investments. If children are involved, discuss and clearly outline who will be responsible for which costs, from school fees to healthcare and daily living expenses. This clarity will help you both manage costs and avoid confusion.
2. Review Medical Aid Options
Assess your medical aid plan to ensure you and any dependents have the right coverage. If your medical aid was linked to your spouse’s plan, you may need to switch to an individual plan or find a new one that meets your health needs and budget.
3. Update Long-Term Cover
Consider reviewing any long-term insurance cover you have, like life insurance or disability cover. With new responsibilities and a single income, you may need to adjust your cover to ensure it meets your future needs. This is especially important if you have dependents, as you want them to be protected if anything unexpected happens.
4. Decide on Where to Live
Think about where you’d like to live post-divorce. Do you want to stay in the family home, rent, or buy a new property? Each option has financial implications, from mortgage repayments to rental costs, so evaluate your budget and lifestyle needs before deciding.
5. Update Beneficiaries on Investments/Policies
If your spouse was a beneficiary on your investment accounts or insurance policies, it’s time to update those details. Review all investment accounts where you can name a beneficiary and make any necessary changes to align with your new situation.
6. Update Your Will
Your Will may also need an update. Removing your ex-spouse as a beneficiary or changing how your assets are distributed is an important step to ensure your estate is in order. Make these updates as soon as possible to reflect your current wishes.
7. Review Your Financial Plan
Lastly, review your overall financial plan. This includes assessing your financial stability and any goals you set before the divorce. Are you still on track to reach your financial goals? Would you like to revise those goals? A financial planner can help you map out a new plan that aligns with your future ambitions.
Divorce can be a difficult transition, but with careful financial planning, you can set yourself up for a stable and fulfilling future.
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1 周Great article Stienemarie Bonsma Potgieter, CFP?