For most couples, divorce isn’t the difficult part. It’s agreeing arrangements for money and children – that’s where it all gets nasty. It’s particularly difficult if you weren’t the main financial manager in your marriage. Maybe your soon-to-be-ex took charge of the money, and you were both fine with that while it worked. But now’s the time to take back control. Here are my top five ways to get on top of your divorce finances.
1. See your own story
Before we get anywhere near practical action, it’s important to do the groundwork. To know what your current relationship with money is. Which person are you?
A. I like being on top of my money, in good times and bad
B. I think my finances are fine but I don’t really know what’s going on
C. I’m terrible at money and I can’t do this
If you’re person A, great! Having the attitude that you are in control of your finances rather than them being in control of you is exactly the sort of way to manage your divorce finances. You never know what curveballs life may throw, but this approach means you’ll handle it.
If you’re person B, now is the time to open the box! You may find financial admin a chore, but it really is worth your while making friends with your financial situation, whatever state it’s in. A big reason for this is that if people are asked to guess how much money they need to live on, or the value of their house contents, they often wildly underestimate! You are doing yourself a huge disservice if you let your soon-to-be-ex call all the finance shots in divorce and hope it will be ok.
If you’re person C, I want you to put both feet on the floor and take a deep breath. And I want you to know this: you have all the skills and abilities you need to manage your money. You really do. Yes, it will take some learning, but you can do it step by step. If you need help, there is help out there: from independent financial advisers to the Citizens’ Advice Bureau. But the first step is the bravest, deciding you are going to face this fear. And I am here to help you.
2. Know your values
So you know which camp you’re in when it comes to you and money. But what about you and life?! This is a biggie, because actually, we can spend a lot of energy on the wrong things in divorce. Like power games with your soon-to-be-ex, which can be so tempting, especially if they are behaving like a right tool!
Here’s what I want you to remember. Your divorce isn’t about them. It’s not even about your marriage ending. It’s about you and your future. It’s the start of something new. And what’s this all got to do with money?
Money is what helps us live the life we want to live. It’s not there for its own sake. It can be hard when your lifestyle has to change – which it inevitably will do through divorce.
If there is plenty of money in your marriage you will be able to continue much of what you did before, but do you really want to? And if there’s not enough money to replicate married life, this really is your sign to delve into what’s important to you. You can read more about getting to know your values here.
3. Get organised
The best way to get on top of your divorce finances is to create time and space for it in your life. Set aside time each week to progress your understanding of your finances and progress your divorce admin. I know life is busy, but make this a non-negotiable: your future life depends on it!
Our brains feel calmer when they know there’s a sense of order. It means they can relax. So create some order. Move the emails to a folder labelled ‘divorce finance’. Set up an online folder. Buy a concertina folder for all your paperwork. And make sure you have time each week to do what needs doing: opening bank statements, responding to emails, doing financial research.
4. Know your assets and liabilities
Your assets are everything you own that has material value: house, car, jewellery, artwork, business interests, investments, savings, pension. It feels daunting to understand the full picture, but you absolutely must. Do not skimp on this, you are cheating your future self if you do. And don’t guess! Most of us are terrible guessers. Use the internet to research current value. Open the bank accounts, including the forgotten ones.
Your liabilities are everything you owe. Mortgages, loans, debt. If you haven’t been on top of this sometimes it can come as a nasty surprise. You might have a lavish lifestyle that’s propped up by an awful lot of debt. Anything that’s in your name and in joint names is your liability.
It is always, always far better to know where you stand. Then you can seek the support you need: whether that’s financial advice to make the most of your assets, asset tracers if you’re in a high wealth marriage and you suspect your soon-to-be-ex is hiding something from you, or debt advice if you need help managing.
5. Know your living costs
Once you’ve got a picture of your assets and liabilities, you need to understand what your day-to-day living costs are. What do you need to maintain your lifestyle? When looking at this it’s important to do three things:
- Use bank statements, don’t guess!
- Look at a whole year, so you don’t miss annual costs, such as insurance, holidays or Christmas
- Think about how your needs will change in the future. If you have children, your expenses may increase, then reduce when they’re grown up, for example.
It’s so important to know what you need to live on. If you’re in a marriage where there’s plenty of money, then there is no need to accept the bare minimum in terms of a financial settlement: the current law takes into account existing lifestyle. And if there’s not a lot of money to go round, it’s so important to start planning now. Think about what income you need, and what work you could do to get it.
Do these five things and you will become an amazing CFO (chief financial officer) of your own life. Not just for divorce, for all the years that follow – where you can start to really lead the life you want.
Want to make a financial plan with my help?
All my Absolute Academy members get access to me every week, answering their specific questions about their divorce, their worries and their future. Not only that, they get all the toolkits and resources to walk them through creating and implementing their own divorce plan. So they know at every stage they are doing all the right things to get divorced on their terms.
I’m thrilled that we’ve just had a few people leave The Absolute Academy! Why? Because I don’t want you there forever, just for the months you need to really crack your divorce and fly! So the good news is there’s space for you to join us now, and get my eyes on your divorce. I’d love to see you in there.
About Emma
Emma Heptonstall, the Divorce Alchemist is the author of the Amazon best-selling book How to be a Lady Who Leaves, the Ultimate Guide to Getting Divorce Ready. A former lawyer, Emma is a family mediator and founder of Get Divorce Ready the online self-study and group programmes. Emma has been featured on BBC Radio, The Telegraph, the iPaper and in Marie Claire Magazine. Emma is also the host of The Six Minute Divorce Podcast. To find out more visit www.emmaheptonstall.com
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