You’re in a situation where you’ve sold your house, your cash is split, and you’re on your own. It might feel a little scary but don’t worry, as in this article, I share my knowledge on five financial mistakes not to make when you separate.
There’s so much to think about. But don’t let the overwhelm stop you from making the right decisions. You’ve got this far. It’s time to put the battle behind you, start moving forward, and take control of your finances so they work the best they can for you long-term.
You are in the driver’s seat. Keep your hands on the wheel, and don’t look back.
1. DON’T GO ON A SHOPPING SPREE
OK, so you’ve got some cash in your bank account following your financial settlement and you are accountable to no one but yourself. It might feel exhilarating and the temptation to spend, spend, spend will be high. After all, you’ve been through hell and deserve some enjoyment.
I’m not saying you can’t treat yourself, but please be careful.
Keep spending to a minimum. Think: New bed covers, a fresh haircut, or a household appliance that will make your life easier.
Do not buy big ticket items or land yourself an unhealthy spending habit that is hard to curb.
2. DON’T GO IT ALONE
Between navigating the rocky road of separation and divorce, juggling kids, and finding your new self, too many people put their finances last.
I believe that seeking help with your finances when going through a separation is one of the best things you can do for yourself.
Whether working with a financial advisor, accountant, or other professionals, getting expert guidance will help you understand your options, make informed decisions, and avoid costly mistakes.
A financial professional can help you create a budget, understand your assets and liabilities, and plan for managing your finances post-separation. They can also help you navigate your separation’s legal and tax implications, which can be complex and confusing.
3. DON’T IGNORE JOINT DEBTS
I know from personal experience how overwhelming it can be to deal with joint debts. Still, addressing them head-on is essential to avoid potentially serious financial consequences.
Ignoring joint debts can lead to missed payments, damaged credit scores, and legal action. Even if you didn’t personally incur the debt, you are still responsible for making payments as a joint account holder. If your ex-partner fails to make payments, your credit score can be negatively impacted, and you may be held legally liable for the debt.
It’s also important to consider the impact of joint debts on your credit score. Late and missed payments can significantly impact your credit score, affecting your ability to secure loans, credit, and even housing in the future.
4. DON’T FORGET ABOUT YOUR GOALS
Having just come out the other side of a possibly messy separation, you might be simply trying to keep your head above water.
I get it.
However, now is the perfect time to focus on your financial goals for the future. After all, you have no one holding you back and you have complete control.
What are your goals as a single parent? Would you like to buy a property, travel, or study? All these require monetary support but also discipline to make them happen.
As mentioned, work with a professional to ensure you are on track. Alternatively, get yourself financially educated and download a personal budget app so your money works for you and pushes you and your family towards your goals.
5. DON’T LISTEN TO EVERYONE
As someone who has gone through a separation myself, I understand how overwhelming it can be to navigate the financial aspects of this significant life change.
One of the most important things I learned during this time is to be careful who you take financial advice from.
It’s natural to want to turn to friends or family members for guidance. However, remember that their experiences and perspectives may not necessarily apply to your situation.
Be sure to approach financial decisions with a level head and seek out multiple sources of information before making any major choices. Consider researching and educating yourself on different financial options, such as budgeting, debt management, and investing.
You can also contact community resources, such as local support groups or non-profit organisations offering financial guidance.
Ultimately, the most important thing is to take the time to carefully consider your options and make informed decisions that will help you build a secure financial future for yourself.