How to Keep Money in a Divorce



Many people going through divorce get to a point where they wonder how their finances are going to hold up. Splitting up can sometimes mean splitting a salary between two entirely separate households, and if other child support, maintenance, and/or alimony issues are involved, things can become even tougher. Moving can also mean needing to purchase entirely new household staples such as sets of dishes or a couch, if your ex got to keep the ones you had before.

Look Before You Leap

Planning ahead of time can save you a lot of headaches. Yes, it’s easier said than done, but if it is at all possible, take inventory of your financial situation and start making plans as soon as you can, so you aren’t surprised later on. Don’t avoid it because it’s unpleasant, as it will only be more unpleasant if you find yourself in more debt than you would have been if you had dealt with it sooner.

Get Back to Basics

Remember that budget you had to live on when you had your first apartment, or bought your first car? Budgeting down to the last dime may sound trite, but knowing you’ll be able to pay the rent as long as you don’t go out for too many restaurant meals can be a big help, especially if you haven’t had to worry about cash flow for a while.

Insurance: Oft-Forgotten but Crucial

In her book, Divorce Dollars: Get Your Fair Share, Akeela Davis discusses the many types of insurance that could make or break your new financial independence. Davis points out the impact your varying insurance policies can have on your life if you are newly single.

Disability insurance, critical-illness insurance, and long-term care insurance are particularly important for the single adult, because his or her income is no longer supplemented by that of his or her spouse. If an individual is covered under his or her spouse’s life insurance which has been provided by an employer, that policy will no longer cover both spouses following divorce. If a couple jointly owned a life insurance policy, there may be assets incorporated into the policy which need to be separated in the divorce proceedings.

You also need to make sure that your vehicle’s registration and insurance are in your name, not your ex-spouse’s, if you are the primary operator of the vehicle. It protects you in the event of an accident; it also protects you from your spouse selling the vehicle out from under you, if the registration and insurance is still in his or her name.

Changing insurance policy information may not appear to save you money immediately, but it can save you from a multitude of problems and costs in the long run.

Don’t Forget About Pension Splitting

Dividing assets in a divorce usually involves spouses making checklists and then working through the details, but as much as 85 percent of Canadians forget about pension splitting, according to a study by Dorothy Easton, a graduate of Simon Fraser University’s masters of public policy program. Easton found that Canada Pension Plan receives only 9,000 applications for Canada Pension Plan (CPP) credit splitting from an estimated 600,000 divorcing couples each year.

CPP credits accrued during a marriage are recognized as a marital asset. They are automatically divided equally when the CPP is notified of a separation or divorce, but only one in seven divorcing couples divide their CPP credits.

See the CPP website for more information about CPP credit splitting upon divorce or separation.

See a Financial Planner

Don’t be afraid to ask for professional help. Financial planners can help you see things you may not realize, and show you how to stay on your feet. Look for a financial planner with recognized certifications, such as the Certified Financial Planner (CFP®) designation.

For more information on finances after divorce, see Divorce Dollars: Get Your Fair Share by Certified Financial Planner Akeela B. Davis. It is a useful resource when divorcing, as it demonstrates in a step-by-step manner how to overcome the financial challenges of divorce and lead a financially healthy life going forward. 

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