Although much depends on your personal situation, including how amicable your break up is, here are some good tips to help you make the best of a difficult situation from a financial perspective:
- Take note of your expenses
In order to create a realistic budget after the divorce, you’ll need to be clear about the income and expenditure of your household. It’s also important for the judge or your lawyer to be able to make clear decisions on how assets are split. Expenses can include rent/mortgage payments, food bills, transportation, childcare and anything else that you spend on. The next step is to predict what expenses are likely to be incurred in the future – you might use previous years for this but it’s also important to think ahead to big events such as college tuition which might have an impact.
- Get your paperwork in order
Your financial records will be used throughout the divorce process therefore it is essential that they are comprehensive and up to date. Paperwork includes anything and everything, from bank statements to pay slips, tax returns, investment account statements and insurance statements. In addition, make a list of your debts and which are both individual and joint, such as credit cards, mortgages, lines of credit etc.
- Be prepared for possible animosity – Even if your relationship with your ex-spouse is amicable, the strain of disclosing financial information and negotiating about future finances can cause confrontation. Ideally, both parties will freely exchange information but this may not always be the case.
If you own joint savings plans, such as RRSPs RRIFs or TFSAs, you will need to divide them between you and set up new ones in your own names. In addition, you should inform the Canada Revenue Agency that you have divorced as this may affect your eligibility for certain benefits.
- Think about using talking to us
If you don’t know where to start and how to set your finances, let us guide you through our very simple steps to help you set your own finances easily and set things up properly from the start!
- Rein in your spending
Now is the time to be mindful about making big financial decisions or changes, or to spend excessively. The best advice is to continue to use the joint accounts for joint liabilities like the mortgage for example until it is sold. If you have everything joint, it is a good time to open your own bank account and get your pay deposited directly into it. In a perfect world, keeping all financial matters above board and transparent with your spouse until the divorce is finalized would be ideal.The reality might be different and this is why opening your individual accounts sooner after separating is a step that will empower you to take control of your own finance and learn how to take care your finances.