Money Management After Divorce
Ending a relationship can be draining in many ways. It takes an emotional and physical toll on a person, but it also can take a toll on one’s wallet. Many of the changes caused by a divorce or separation can create financial strain for one or both parties. If children are in the picture, the feelings of financial strain can become even stronger. It might seem challenging at first, but through proper money management after divorce, you can improve your family's financial standing.
As you begin the divorce process, one of the first things you should do to manage your finances is make the necessary changes to your various accounts. Any joint accounts that you share with your former partner should be closed. You will also have to consider notifying other accounts of information that has changed, such as your name or home address. While you will need to update this with the bank, you’ll also need to change it on your driving licence, passport, and insurance and utilities accounts. If you have children, don’t forget to notify their school of the change in your name and address. While your children’s teachers may already know what is going on, this information should be updated with the school office for official purposes. Getting all of these things done will not only set you up well as you move into the future, but it will help solidify the reality of your divorce or separation. It may be an emotional process, but it must be done.
Another important element to managing your money after divorce is in regards to your credit. It's important to build good credit, especially if you currently have bad credit or have never had a credit card under your name before. If you are employed and have a steady income on your own, you shouldn't have trouble getting one; if you are unemployed and have little or no income, it will be more difficult, but you may still be able to get one. Once you have a credit card, use it often but always within your means. You'll want to pay off the whole balance each month, so don't see having a credit card as an opportunity to spend beyond what you can handle. As you use the card, check your credit score often. If you use your credit card and pay the balance on a regular basis, you'll see an increase in your credit score over time. Using a credit card is a responsibility, so you should factor in your credit as part of your overall financial plan after divorce.
Proper money management requires proper planning and strategy. Come up with a plan for how you will manage your finances from this point forward. To start, you’ll want to review what your income and expenses were before your divorce. Your income will be the money you have coming in through various channels including your job, investments, child support, spousal maintenance, etc. Your expenses will be all of the money you have going out to cover your various bills and daily costs of living. Compare what your previous income and expenses were when you were in your relationship to what they are now after your divorce or separation. You will likely notice that these totals are quite different and that your expenses now are higher than they were before when you were working with two incomes. Work to save as much money as possible by cutting out any non-essential expenses on things like entertainment or electronics. This will be especially helpful to a parent who must make child support payments to their co-parent. On the other hand, if you receive child support payments, you’ll want to look at the total you are receiving and allocate portions of that to the various costs of living related to your children. Child support is meant to help you maintain your child’s lifestyle after divorce, so you should not spend those funds on anything else other than on things that improve your child’s health and overall well being. If you are having a difficult time building a financial plan, talk to a professional who is specially trained in financial matters related to divorce. They can greatly help in creating a plan that fits the needs of you and your family.
Finally, if you have kids, part of your money management plan after divorce will be to have a plan for how you and your co-parent will document parenting expenses and reimburse each other for any shared costs. The old methods you used during your relationship to share funds, such as having a joint account or shared credit card, are not suitable solutions now. In this case, expense tracking and payment management tools tuned to fit the needs of divorced or separated parents will be a better fit. The OurFamilyWizard website provides an array of tools to help co-parents document their spending and make reimbursement requests when necessary. The website also allows parents to document payments made outside of the website so that they may maintain an up-to-date record of what has been paid and what is still owed between each other. No matter how co-parents wish to manage their expenses and payments, the OurFamilyWizard website has the right tools to support each parent in their money management plan.
Getting divorced or separated isn't easy on anyone, kids included. Managing your money wisely will help your whole family to better deal with what lies ahead as you move forward. Making changes to your current accounts, maintaing good credit, and having a plan for handling your finances and shared parenting costs with your co-parent will make managing money after divorce much easier in the long run.