When my husband and I separated last year, it was an emotional time with a lot of uncertainty. Part of what fuelled that uncertainty was dealing with the financial effects of no longer living together.
Here Are Some Financial Lessons I Learned About Separating
1. Separating is Expensive
There's no doubt about it, separating is bad for your finances. While you likely started out with one home and two incomes, separation means you'll need to pay for where you live on your own. I also had to pay some extra fees as I worked out my separation agreement with my ex-husband. For example, I paid about $500 to have my house evaluated, paid monthly fees on debts until the division of our assets, and also paid for a mediator to advise us and write our separation agreement.
2. Minimize Money Conflicts
Conflict and misunderstanding can come up easily after a separation, and you probably want to keep friction points to a minimum. What that means depends on your situation. For example, if there's a potential for conflict with your ex, you might not want to share the family car after your separation, even though this will save you money. If money was already a source of conflict in your relationship, it won't magically change with separation. Be aware of the role you play in managing finances and try to minimize conflict as you work towards an agreement.
3. Try Not to Overspend
When you're feeling emotional, it's easy to overspend. The quick high and fleeting happiness we feel when we spend is a welcome break from the stress of going through a separation. But racking up debt at this point is not a great idea. You'll have a lot of extra expenses over the next while, so you don't want to also have the added expense of paying off debt. If you do find yourself unable to make ends meet, this could be a time to use your emergency fund.
4. Keep it Fair
If one person initiated the separation, they might feel guilty and as a consequence take on more than their share of the family finances. In Canada, child support is calculated using income, custody arrangements, the number of children, and province of residence. Keep this in mind in the early days as you work out day-to-day spending after a separation.
5. Research Government Programs
If you have children, let the provincial and federal child allowance programs know that you've separated so your benefit can eventually be recalculated. Since we live in Quebec, my ex and I qualified for five hours of free family mediation to work out a separation agreement. Although we ended up needing a few extra hours, we still paid very little compared to the cost of hiring lawyers and going to court. If you can work things out amicably, that's always preferable, both emotionally and financially.
6. Consult with a Financial Expert if You Need Help
I met with a fee-only financial planner to talk about how best to manage my money once my ex and I divided our assets. The meeting really helped me gauge how much I could spend and what I would need to do to live within my means. It also gave me some peace of mind. It was like having a road map for the future – subject to periodic revisions based on changes to my situation.
If you're heading for separation, or experiencing it, know that it'll likely be a difficult and stressful time. Life's full of ups and downs. Hopefully these tips will help weather the financial stress of a separation.
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