Last year, Canada recorded almost 300 divorces for every 1000 people. And one commonly cited reason for divorce was strains and arguments over money and debt.
So if you are divorcing soon, your finances should be on your list of priorities. You want to get through the divorce in a solid financial position so you can create a new and happy life for yourself.
We’ve put together this financial guide to help you do that. We’ll help you navigate some of the twists and turns of divorce from a money perspective. Read on to learn our top seven financial tips you need to know.
1. Know the Details of Your Marital Finances
Navigating a divorce might feel stressful and complex. So you should be proactive and address your marital finances as soon as possible. Getting all the details together in one place will benefit you later.
Your initial step is to check that you know all your financial arrangements as a married couple. That includes all assets, liabilities, income, and expenses.
Assets might include your home, car, and financial investments. Liabilities could cover mortgages, credit card debt, and loans.
You should also note down your regular household expenses. That includes utility bills, groceries, home insurance, and child-related costs. Keep this information organized using a financial app or spreadsheet.
Having the data in one place will help you make informed decisions during the divorce settlement. As an old and familiar saying goes: “knowledge is power.”
Plus, this data will be a useful starting point for your financial management after your divorce. It will help you set up a stable and realistic budget.
2. Protect Your Credit Rating
If you currently have an excellent credit rating, you must protect it during a divorce. Credit scores are pivotal in your future finances, including your ability to get loans and mortgages.
Sometimes potential employers will check your credit score too. If you don’t manage the settlement well, your credit score might decline after the divorce. Likewise, if you have a poor credit rating, now is the time to do repair work.
So why does a divorce impact your credit rating? Much of this comes down to the active financial changes – closing down bank accounts, for example.
To protect your credit during a divorce, keep up to date on any payments. Never pay a bill late. Continue monitoring incoming and outgoing money in bank accounts – even if you intend to close them during the divorce.
If you have joint debt, like a credit card, consider paying these off, closing them, and opening new ones in your name. Another option to protect your credit is to take out a short-term loan – providing you repay it on time.
Online loans will help you build a good rating in your personal name rather than under a joint one with your ex-partner.
Always be mindful of your financial activity during a divorce. Protect your credit score, which will give you financial freedom in the next phase of your life.
3. Take Steps to Separate Joint Accounts
You likely have joint accounts with your ex-partner. So during your divorce, you’ll need to separate these accounts and create a new individual one for you. Tackle your credit cards first, followed by your bank accounts.
Use the financial spreadsheet you created to move your payments to your new account. Keep track of which accounts you’ve moved and which are still to-do. That will help you avoid a forgotten charge.
Don’t forget that banks will need consent from both of you to close the account. So keep communicating with your ex-spouse throughout.
4. Address Debts and Liabilities
It’s tempting to focus on how you will divide your assets after a divorce. But don’t forget that you’ll need to divide your debts too. It’s best that you get legal advice to help you with this.
A specialist legal expert can guide you on the law to ensure these debts are distributed fairly. You don’t want a divorce saddling you with high debts you struggle to pay.
It might make sense to get consolidation or short-term, no credit check loans like Kingcash to help you with immediate costs while you put together your post-divorce budget.
5. Understand Child Support Responsibilities
You’ll want to put your child’s well-being at the center of divorce. So ensure you spend some time – with a mediator if necessary – to go through any financial commitments.
It’s important to think beyond current costs such as childcare, activities, and schooling. You will also need to estimate future expenses, such as university fees.
You must work together on this part of the divorce. Draft an amicable arrangement that’s financially workable for both parties and protects your child’s future. And don’t forget that you have the choice of financial help in the form of loans.
6. Review Your Pension Plans
Retirement might seem far away at the moment. But many of us have massive financial assets in the form of retirement funding and pensions. And they have a significant impact on your future.
As these are assets, you must divide them between you as part of a divorce settlement. One thing to consider is any tax considerations – it’s worth speaking to a tax specialist first.
7. Hire a Financial Advisor
Divorce proceedings can get complicated. So if things become overwhelming, it might be time to consider hiring a financial advisor. A professional can offer invaluable financial assistance and help you navigate the process.
They will also be objective, and that can be helpful when trying to agree on a financial arrangement with your ex-partner. They may also offer valuable insight into how you manage finances in the future and come out of the divorce in a financially strong position.
Financial Tips to Guide You Through Your Divorce
Don’t let divorce complexities get in the way of practicing sound money management.
Divorce is an opportunity to resolve outstanding issues and lay the foundation for a stronger financial future. Use these financial tips as a starting point, and reach out to professionals to help you with the finer detail.
If you need fast loans in Canada to help you through the divorce process, apply for one of our short-term loans. As King Cash doesn’t run credit checks, it’s the ideal solution to protect your financial and credit situation during your divorce proceedings.