If you find yourself suddenly single, it’s time to embrace your financial reality. Follow this financial empowerment checklist – especially if you weren’t the lead money manager in the relationship.
Speak to your advisers regularly
Whether it’s a financial planner, lawyer, doctor or insurance adviser, make sure you’re meeting with them regularly to understand what’s coming up for you, such as a major tax bill, how to update your CRA My Account portal with your new status, what to change in terms of your will and beneficiaries, when an insurance payout might happen. Learn about your total financial wellness picture from these pros. Tell them what you think you need. If you don’t like who these people are, switch them. Get a trusted referral (or a few) and find the right fit for you.
Gather up a list of all your assets and liabilities
Assets are things that you own, which grow in value, such as a home, an investment, a savings account, a pension or a business. Liabilities are debts such as a mortgage, car loan, line of credit, a credit card balance or money owed to friends and family. List the total value of each asset and liability, then subtract your liabilities from your assets to determine your current net worth. Your net worth is a key measure of financial health, and the goal is to preserve it so it lasts throughout retirement.
Prepare a preliminary monthly budget
The information from your bills and payments should reflect all the income and expenses running through your bank account every month. For now, while you’re resetting, try not to make any major changes until you’ve spoken to a financial adviser or money coach who will help you target the right changes, like trimming back your subscriptions or renegotiating your insurance. The main takeaway with budgeting is that you want your budget to balance. If you are overspending, you run the risk of going into debt, and there are only two solutions: cut back or increase your income.
One of the biggest financial mistakes I see people make is not adjusting their lifestyle and costs after separating (typically there’s less money for both parties). Carefully build a new budget that is based on what you can afford to spend in this new chapter of your life. Include investments for retirement, as those may have also been affected by the separation. If you were left with a pile of debt as a by-product of the separation, ensure that there is a realistic payment plan for it. Ensure there’s money earmarked for emotional well-being support as you go through this transition. If you are a giver or receiver of support payments as a result of the separation, include that information in the budget too.
Understand your monthly bills and payments
Bills and payments are different from liabilities because you need to pay them monthly, and sometimes biweekly. These can be regular fixed amounts, like rent, or they can vary depending on how much you use a service, such as water. List each bill and payment, with the amount and the time of month that it’s due. If you previously paid bills for the household separately and now you need to pay the whole lot of them on your own, make sure you contact the providers to set up pre-authorized debits and likely your own account portal.
Pull out insurance policies
Insurance protects you in the event of something extremely unlikely like death, disability, a break-in, a car accident or a critical illness. Many policies are, unfortunately, quite tough to read and digest. But you need to understand what you’re covered for and if you still have the same needs now that you’re solo. If you’re not sure, get advice from an insurance professional.
Dig up lease agreements and financing documents for your home and car
These financial agreements renew at various times, and you’ll want to be prepared to either renegotiate or, in worse cases, to move or swap out your car. Read through these documents carefully to understand your financial obligations and those of the lender.
