Finances After Divorce

A question we are often asked when a couple divorce is “how can I afford to live on my own after we have come to a financial settlement?”

Getting divorced can be a major setback for your finances, which can take several years to recover, which is why it is important to consider this scenario before getting married or cohabiting.

Prenuptial agreements and cohabitation agreements if you are planning on living together, although not legally binding, are a document which show a couple’s intentions and are a good starting point to protect assets built up prior to a marriage.

Life changes after a divorce and the lifestyle you have enjoyed may also change, so it is important to put in place appropriate measures to safeguard your assets as much as possible.

Budgeting, debt and savings

If you accumulate debts during your marriage, then these liabilities may be treated as being joint debts when your marital assets are being calculated and split. Money is an area where many couples fall out, so deciding on whether to combine your finances or keep them separate should be an important discussion before you get married.

If you have a lot of debt, then you should have a plan in place for repaying it and then focus on building wealth and assets after.

Your monthly spending will change after you divorce so it is advisable to put a budget together to help you manage the first few months and years. Many people are surprised at how much it costs to run a household on their own so it is important to think about what you can realistically afford.

Child support can be a big expenditure after a divorce so should be one of the primary factors to consider and plan for to minimise disputes in this area and the overall settlement.

Other practical steps you can take is to remove the financial link between you and your former spouse or partner on your credit report. Also, close joint bank accounts and open a bank account in your own name. Build up a good credit history by paying bills on time to help you in the future should you need to apply for credit or a mortgage.

You may want to take independent financial advice to help you achieve your goals for the future and to make sure the assets you have such as savings and pension are performing. If your former spouse or partner has always dealt with the finances, then you need to learn how to manage your finances and who to trust so you do not expose yourself to the risk of fraud.

If you would like to discuss any aspect of approaching and agreeing a financial settlement and your divorce, get in touch with our team today. Sunita Chauhan can be contacted at s.chauhan@gullands.com