Separating or divorcing is a frightening time. For most people, one of the biggest fears is how they will cope financially. Money, and finances at the point of separation are fully explored in this article.
How to get through the here and now
In the short term, you need to make sure that bills are paid, there is food on the table and your children have what they need. You may never have been responsible for the money in your relationship. The whole idea of dealing with the finances may be scary and you may not know where to begin. Even if you have always looked after the money, these tips should help.
It is worth spending some time gathering together your own financial information so that you know what you have.
Bills – Make sure you know what bills you should be paying, eg. Gas, electric, water, mortgage or rent, council tax, home insurance, car insurance, TV licence, credit cards and/or loans, digital TV, internet.
Direct debit – Try to pay everything by direct debit. If you don’t already have them in place, contact the provider and set them up. This will ensure they are paid every month.
Council tax – If you are the only person in your household over 18, you are entitled to a 25% discount on your council tax, contact your local authority to set this up.
Shop around – Use comparison websites to see if you can get your bills cheaper.
Insurance broker – Consider using an insurance broker. Ask for recommendations from friends and family. This may not cost you less but they will help you to ensure that you have the cover you need that will pay out what you need, when you need it.
Budget – Work out how much money you have coming in and how much you need to spend, don’t forget food and clothes. You may need to agree a temporary maintenance payment with your ex. Try to arrange this between you and your ex but if it is impossible to do directly, your lawyer will help.
Preparing for the future
It is worth spending some time gathering together your own financial information so that you know what you have. Your lawyer or mediator will ask you for this. Alternatively, if you are going to try to agree a settlement between you and your ex, you will need to know what you have.
Payslips/accounts – Collect together your latest 3 payslips if you are employed or last three years accounts if you are self-employed.
Bank Accounts – Gather bank statements for your current and savings accounts and cash ISAs. You may have premium bonds as well. Try to find the balances for any accounts if you cannot find a recent statement.
Investments – If you have any investments, eg. shares in companies, investment ISAs, investment bonds, general investment accounts, request current balances from the providers. They will change daily but at least you have a starting point.
Pensions – You will need to find as much information as possible about your pensions. Start with the latest annual statements. Make sure that you have them all. Often people forget to tell their pension providers when they move house, so think back through your employment history and ensure that you have information on any pensions you may have paid into.
Financial protection – You may have life insurance, critical illness insurance or income protection. Try to find policy documents for anything you know you have. If in doubt, look through your bank statements and if you see an insurance company’s name, give them a ring and ask for details of what you are paying them for!
Credit cards and loans – Make a note of credit card balances and loan balances, including car loans or PCP for cars. It is useful to find the original loan agreements as these will tell you when you will finish paying them back.
Where can I get help?
There are financial planners who specialise in divorce. They will be able to help you to make sense of the information that you have found. If you are able to speak to your ex, they may also be able to help you both to agree how to split your finances. You will still need a lawyer to draft the financial consent order.
If you are struggling financially, the Citizens Advice Bureau have people who can help you to understand any help you are entitled to.
Postscript. Links to other organisations and charities that can help and support with finance issues are to be found in these pages. You may also find this article useful as it covers the issues on how assets are split on divorce.