According to the Ministry of Social and Family Development , marriage dissolution rates among recent marriage cohorts have increased compared to those in the past.
Among those who married in 2003, 16.1 per cent had their marriage dissolved by the 10th year of marriage compared to 8.7 per cent for the 1987 cohort. By the 15th year of marriage, 20.3 per cent of the 1998 cohort had their marriage dissolved compared to 12.3 per cent of the 1987 cohort.
Those who have gone through the strenuous process of getting a divorce would know how important it is to get their financial priorities sorted to better prepare for the future.
Here are 10 tips to recover financially from divorce and take control of your finances.
1) Outline Your Financial Goals
It’s important that you take some time out and start to consider your own personal financial goals now that you’re no longer married. In some cases, your goals may not change a great deal, but in other cases they may change significantly. Take some time away to ensure you’re in the right frame of mind when you’re designing your own financial plan. It can also be a smart move to put together a team to design your financial goals including a lawyer, accountant and fee-based financial adviser. Ensure that everyone is on the same page and your goals are aligned.
2) Ensure You Have a Plan
The financial responsibility is now all on you. In most households, one member of the relationship typically looks after the investments, household finances and has a clear picture of your financial position. After the divorce, both individuals now need to take control of all of these areas. Start developing the skills, knowledge and systems to manage your finances going forward. Work with an experienced fee-based adviser to ensure that you’re not wasting any further time, money or energy.
3) Increase Your Education
Invest in yourself. You may be in a position where your income can be significantly increased by upgrading your education. This might mean completing a part-time degree or a diploma relevant to your industry. If you’ve been out of the workforce for some time, upgrading your qualifications may be vital to succeeding in your particular field of expertise.
4) Manage the Risks You Can
As a newly-single person, you need to review your insurance policies. Make sure that your insurance policies cover the people and the key items in your life that you want to have covered. On this note, you should also update your beneficiaries for your insurance policies to ensure that they reflect your current wishes.
5) Review Your Credit Rating
As a first step, it’s important that you review your credit rating and your report. Your credit rating will impact your ability to get back to your financial feet and start achieving your own financial goals. This can be particularly important if you weren’t paying the bills and perhaps didn’t have a credit card in your marriage.
You may also need to rebuild your credit score and clear out any outstanding issues. This will allow you to make sure that your finances get back on track.
6) Track Your Investment Portfolio
If it was your previous partner’s role in the household to look after your investment portfolio, then it’s time for you to take over the controls. If you’ve worked with a financial adviser to look after your investments, schedule a time as soon as possible to sit down with him/her and ask them to walk you through the existing investments, the overall strategy and exactly how they can be tracked. Be sure to agree on a review strategy with your Adviser also to ensure that you’re kept informed of how your investments are performing.
7) Start Today!
While it may seem like a daunting experience, when it comes to your personal finances, the best time to start is always today. Review your personal balance sheet, cash flows, insurances, estate planning, superannuation, beneficiaries and your investments. By starting today, you can make the most of the time value of money and put yourself in the best possible position to achieve your financial goals.
8) Set Up a Budget
Your standard of living may change after your divorce so it’s vital that you have a budget for your new lifestyle. In most cases, you may be going from a double-income to a single-income household and it’s important that your budget reflects this. Make sure you’re realistic with what you can and can’t afford. While this might be difficult, facing the reality now will allow you to achieve your financial goals in future.
9) Take Stock of Your Financial Position
Now that you’re a single-income household, you need to take stock of your current financial position. Put together a list of all of your assets and your liabilities to get a true sense of your net worth. This will act as your starting point when putting together your plan to achieve your financial goals. It’s also important that your asset allocation is aligned with your individual risk profile so we’d always suggest reviewing this carefully as it can dictate over 80% of your overall returns.
10) Stay On Track
There may be times where it all feels too hard, but remember that bouncing back financially from divorce is certainly possible. With the right systems and strategies in place, you can get yourself back on track to achieve your financial goals.
This article first appeared on Consultwho.sg.
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Adviser. He is listed on Consultwho.sg, a platform that aims to help users with their personal finance issues – ask a question anonymously, or connect with our financial consultants.
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