The festive period might feel like a dim and distant memory, but for some, the repercussions last a lifetime.
Christmas can bring stress and heartache for families under financial or emotional strain and if the cracks in your relationship are already starting to appear, it can prompt some big changes come the new year…
A new start
Did you make a new year’s resolution? Are you still sticking to it? Nope, me neither!
We all know January is the time for fresh starts, so it might come as no surprise that it is the busiest month for divorce solicitors. Being at home with family at Christmas, the lack of normal routine and the stress of the occasion is difficult enough when you’re in a solid relationship. When your partnership is already under strain, it can be the final straw.
Whatever makes you decide go your separate ways, no one emerges from a divorce unscathed and the impact on finances is evident for both parties.
Separating your finances
Did you know 42% of marriages in the UK end in divorce? What is even more startling is that only 7% of divorcees will consult a financial planner during their legal proceedings.
This seems baffling to me. How on earth are you supposed to move forward in a positive manner if you don’t have a financial plan in place?
Divorce is an emotionally draining time and retirement might seem like the least of your worries, but it is really important to focus on your future needs, so you can work towards the fairest outcome for both parties.
The later in life divorce happens, the greater the impact on your finances. When people have had a common goal for years, they create a complex tapestry of joint savings, income, pensions and children that is difficult to unpick. Working through this process can be incredibly upsetting when you are so emotionally invested and it is often helpful to take a step back and ask a professional to provide some clarity.
We will look at the cold hard numbers and although it will be painful, we can start working out a way forward together. We will support you through the entire process, until we find the right balance.
It is essential to look at all aspects of your finances and start from the bottom. Property, pensions, investments and cash all need to be valued and considered before decisions can be made. For example, you may both love the family home, but sometimes it can be unaffordable for one person to keep such a valuable asset. It may end up nothing but a millstone around your neck.
We will work with your legal representative to look at what other options are available and what is affordable, not only now but also ten years down the line.
On average, pension contributions reduce by £63 per month after a divorce. When you think about it, this is really quite worrying. There is only one person providing for your retirement – you! Whilst we recognise this is not always an immediate priority, you do need to consider what you should be doing to increase your pension security.
Rebuilding your future
Before heading into discussions about what you do and don’t want your ex to have, you must take a look at what you need to live the life you want to build once the tumult is over. So, what should you consider?
From my personal experience and when helping clients in this situation, the priority should be providing a financially stable household for you and any dependent children.
Make sure you sever joint liabilities and debts and ensure they are not allowed to grow by the other party. Any joint credit cards also need to be cancelled.
Going forward, it is essential your mortgage repayments are affordable and your home is safe. This may mean you have to set a budget for a new property, or remortgage the existing one for an extended period.
Having a stable income is another priority. This might mean retraining or in some cases (mine included), starting a new career to increase your earnings. Look at your spending patterns and make reductions where you can as your income dictates. We offer a cash flow service that can help identify where your money goes each month and set a budget to keep you on track.
Continue your pension contributions or start a new plan if you don’t have one in place. It may not seem essential when you are so stretched, but the future is definitely worth protecting and small contributions add up over time.
It’s a sad fact that people in unhappy relationships are putting off separation because of the current cost of living. If you find yourself in this predicament, come and talk to us. Starting the planning process may help you take the next steps to a better life. We can formulate a plan that will support your new chapter.
To find out more about the services we offer to separating couples, book a free, completely confidential consultation with one of our friendly experts. Telephone (01246) 289191 or email: enquiries@belmayne-ifa.com
