DIVORCE AND FINANCES
What if My Spouse Handled the Money?
In some relationships, one spouse takes responsibility for handling the finances and the other steers clear of anything related to money. This may be for simplicity’s sake, because one spouse has a stronger interest, or for any number of reasons.
While there is nothing inherently wrong with this dynamic in a relationship, it becomes a major problem when a couple makes the decision to separate. The money-avoidant partner will now need to pay bills, save money for retirement, plan their investments, and manage their banking, among other things.
So, how does a spouse who can’t tell an RRSP from an RSVP learn to stand on their own financially?
Create A Money Plan
First and foremost, create a plan that starts today. When it is divorce and finances, don’t wait until next month, next week, or even tomorrow. Get started now!
If possible, ask your friends and family to explain money concepts that you do not understand. If they are in the dark as well, you may want to try conducting a bit of internet research or talk to your bank to learn the basics. It is your responsibility to educate yourself so that you can put your plan into action and become a savvy money manager.
Create A Budget
When you actually face Divorce and Finances, your next step is to create a budget. Begin keeping track of your expenses on a monthly basis to get a handle on your spending habits and determine whether your income can support your lifestyle.
In many cases, you will be moving from two incomes down to one, and may need to tailor your spending to this new reality. Make sure you are living within your means!
What’s lies ahead in the future?
As part of your Separation Agreement, you will create a plan to close your joint accounts and joint credit (credit cards, personal loans, lines of credit, etc.).
In the meantime, start out by each creating your own separate bank accounts that pay into your joint account. This will get you in the habit of maintaining the money in your own account while you get settled. Do not let your ex-spouse continue to the pay the mortgage, bills, or other debts on your behalf.
You are separating, and you will be responsible for paying for each of these. When it comes to dividing your financial lives, remember that a clean break is the best option. Establish your own financial identity and begin building your credit!
Divorce and Finance: Start Thinking Investments
Finally, start thinking about investments. When you separate, you may come into a large sum of money, especially if you have sold the matrimonial home. You need to make that money work for you in a way that will set you up for the future. Consider speaking with a financial advisor or other professional with expertise in the area.
There are many people who will be happy to help you regain control of your finances, but the onus is on you to take the initiative. It may be intimidating, but the alternative of having creditors banging on your door is far less desirable.
Remember, no one starts out as an expert. With a little time and effort, you will know your finances down to the penny. Have faith and start taking your first steps towards financial independence today!
Gail Vaz-Oxlade's Guide To
For more than 20 years you have witnessed Gail Vaz-Oxlade’s trademark straight-up money wisdom, both on Radio and Television, most notably as host of TVs Till Debt Do Us Part, Princess and Money Moron. Gail is a multiple time, best-selling financial author, and one of the top Canadian authors of the past decade. Gail brings her common sense wisdom to answer your questions about XXXXXX and divorce in Ontario.
The Unofficial Rules of Divorce:
- Divorce gets prickly, even in the most amicable situation
- It’s often less about the legalities and more about the money
- People make expensive mistakes because they don’t make a plan
- Before you do anything, understand your rights, obligations & complexities