Restarting after a divorce

Separation and divorce are painful and exhausting – and also expensive. After a marriage ends, you need to restart your life with separate finances and a new financial plan for moving forward.

When you start again, it’s not from zero, but it can feel that way sometimes. You are often working with fewer resources, which is tough, and things that once seemed simple are now complex. But until you press reset on your income, savings and long-term financial planning strategies, you can’t really move on.

Here are some ideas for restarting your finances after a marriage ends.

Firstly, the best way to restart is to ... start. I have seen clients who are paralyzed by their situation.

Once you’ve made the decision to separate, be honest with yourself and recognize it’s time to move forward. Take charge of your new life right away, otherwise you’ll put your financial self in jeopardy.

You can begin by separating your finances. Cancel automatic deposits to joint accounts and credit cards where your spouse is a secondary card holder and open new accounts and credit cards in your name.

As well, if you changed your name but are now changing it back, start updating your identification right away. If you have younger children, make sure the paperwork at their school and summer camps has been updated with new phone numbers and email addresses, too.

Once you have a separation agreement and it’s been decided who gets and pays for what, start removing names from the ownership of properties and vehicles. The partner who has moved should issue change of address cards.

That’s easier said than done though; some of these changes can be emotional. Perhaps you’ve agreed to give up the family cottage or sell off a beloved vintage sports car. Putting those assets in another person’s name can be difficult. But no matter how hard, it needs to be done right away.

It’s likely that for the last few years you’ve been budgeting using two incomes. Now you’re spending and saving with just one. You may need to reassess your lifestyle and spending habits.

Create a new budget for yourself. You may, at least in the short term, have to cut back on certain expenses like pricey meals out with friends or mid-winter vacations.

Work with your financial planning professional on creating a new financial plan. You may have to come up with a new timeline for retirement – you may have to work longer than expected now – or come up with new assumptions around pension plan payouts or RRSP savings.

You may no longer be receiving survivor benefits from your former spouse’s pension plan or that your medical benefits have been reduced or eliminated. You may need to setup new health and disability insurance for yourself too.

Also, update your will and the beneficiaries on your retirement accounts and life insurance policies. In many cases, the recommended beneficiary designation after a separation will be to “estate,” but you should confirm this with your advisors.

Restarting your life after divorce is difficult, but it also brings with it new hope for your future. You will get through this – and when you do, by taking the right steps, you may find yourself in a better place, both personally and financially.

Seek out the guidance of a Certified Financial Planner (CFP) professional to guide you through this process. Ideally, find one that also holds the Chartered Financial Divorce Specialist (CFDS) designation as well. If you need to reach out to someone who holds both designations, feel free to send me an email and I can make an introduction.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.