Hopeton Morrison, Contributor
SEPARATION AND divorce is a subject that rarely brings joy to anyone other than divorce lawyers.
But breakdown in personal relationships has spiralled as lifestyles have changed within the last four decades. Both men and women suffer in a divorce, but life goes on for both parties after the dust has settled.
Here are some financial coping strategies for those experiencing a separation or divorce.
Remember that there is life after divorce, albeit one that entails a dramatic shift in lifestyle. Only five per cent of divorce issues is about child sharing while 95 per cent is about money. Money issues do represent one of the major factors in the break up of relationships.
So, then, if you are caught up in a separation or divorce avoid making a hasty decision to split as you need to operate with a game plan rather than getting caught up in the heat of the moment.
Map out an accurate picture of your marital financial status so as to facilitate a 'fair' division of assets. You will almost certainly need to sort out financial records as these will be crucial when it comes to matters like child support and who will take responsibility for that and other financial obligations that will survive the divorce.
Although the temptation is great avoid going it alone. In addition to the services of a quality attorney, seek out a quality financial advisor. It is rare that the whole experience does not get ugly. Divorce isn't fair for several reasons and any 'victory' is invariably a pyrrhic victory. Just take what is most important and forget the rest.
Your marital home may not be the prize that it appears to be after all. This is an asset that women especially, generally want to hold on to, but you are advised to take a hard look as to whether it is something that you can really afford.
Remember you are looking at mortgage, maintenance, taxes and you should weigh this against other assets as it might be more prudent to sell and then divide the proceeds.
Except for child support, much of what results from a divorce is final. It is recommended that women take alimony in a lump sum instead of monthly instalments, as historically half of all ex spouses default on this.
So, then, the divorce is history. For some the challenge really begins here. Here are some additional coping strategies:
Overhaul your finances. Budgeting now becomes crucial.
In all likelihood you will experience a reduction in your income. You are now forced to do more with less. Downsize by removing your child to a less expensive school for example.
If you were not employed, then you definitely need to find work. If you were employed before your divorce then you could need a second job.
If you have never had credit in your name start building up your credit rating.
Re-evaluate your insurance needs, especially where disability insurance is concerned, as in the event of an accident your dependents are assured of some income protection.
Update your will and all other documents in which your
ex-spouse is a beneficiary.
Focus on your retirement. In that regard, don't let your children's future needs derail your retirement financing. It does sound hard but you are advised to talk honestly to your child about what you can and cannot afford.
Hopeton Morrison is general manager of St. Thomas Cooperative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to: hmorrison@stccu.com
