Are you a young person struggling to manage the financial impact of a divorce? Here are six ways you can save money throughout the divorce process.
When going through a divorce, the financial burden of the change in lifestyle and many legal fees can be overwhelming. This is especially the case when you are going from a position with two incomes to just one.
Even with a financial settlement solicitor, there are many things that you can do during your divorce to improve your financial situation. For example, accepting financial advice, considering child benefits if applicable, and closing any joint accounts can be a good start.
As a young person, you may feel on your own in this. Many of your friends may not understand what you’re going through. So, here are our six top tips for young people aiming to save money during a divorce.
1. Remember to close any joint bank accounts
When dividing assets in a divorce, it is surprising how often the joint bank accounts are overlooked, especially when an ex-spouse has been taking advantage of the joint funds. To ensure that you aren’t missing out when your assets are divided, handle any joint accounts swiftly.
The best way to manage your expectations regarding finances in joint accounts is to agree on how much each of you will be using to cover living expenses per month. By doing this from the beginning, and being sure that the amount decided is fair, you can avoid any unpleasantries and prevent your spouses from taking liberties with these funds.
This can also apply to any credit cards and saving accounts that may be in both of your names.
2. Making use of child benefits
In the event that you have a child, one of the most helpful financial contributions is child benefits. Being the sole or primary carer for the child or children entitles you to child maintenance from your ex-partner. This could be a very significant amount of money with the potential to massively reduce the financial strain you are under.
In the event that you have a shared care agreement, but you are a non-earner or a much lower earner, you can apply for Child Tax Credits or, as it will soon be known, Universal Credit. It is also important to note that child maintenance and other financial support related to childcare from your ex-spouse are ignored when it comes to tax purposes.
3. Moving in with a roommate or new partner
Although you may believe moving in with a new partner will lessen your financial burden during a divorce, it has the potential to have the opposite effect.
The income and resources that your new partner has will be taken into account when dividing your and your ex-spouse’s assets. Because of this, it can be more financially beneficial in the long run to hold off moving in with a new partner.
However, post-divorce, it can be advantageous to consider living with a roommate. It can be helpful to divide bills and rent, especially after becoming used to having two incomes.
How beneficial having a roommate is can depend heavily on the individual. Some roommates will add emotional strain during this difficult time by failing to uphold the level of cleanliness you may expect, adding to the food bill, and driving up the price of utilities. Because of this, it’s important to only choose a roommate you can trust.
4. Don’t avoid financial advice
Whether you are not offered financial advice or don’t believe you need it, seeking out the opinion of a professional can have a massive impact on your financial situation.
There is no clear answer to how long it will take to recover from a divorce because each situation is unique. However, having a financial advisor to help you to manage your finances and create attainable goals for the future can be a great way to manage your expectations and financially recover from your divorce as quickly as possible.
A financial advisor can help you with many different aspects of your finances, including but not limited to:
- Mortgage
- Investments
- Pension
- Home and car insurance
- General finance planning
5. Be realistic when buying a new home
When looking for a new home after or during a divorce, it can be easy to look for somewhere that is similar to the property you are leaving. You may feel like anywhere smaller is a step backwards from where you were, but this is often a mistake financially.
When you were married, you had the benefit of two incomes and, due to the divorce, you may no longer be able to realistically afford a home the same size or price as you did before. Because of this, it can save you a lot of money to downsize.
Doing so will allow you to more comfortably pay rent or a mortgage without adding to the financial strain of the divorce.
6. Ensure your assets are split fairly
It is a common misconception that, during a divorce, all assets are split 50/50. The division of assets throughout a divorce is a negotiation, and it’s important to fight for what is important to you.
For example, you may want to retain greater ownership of the property you share with your ex-spouse. To do this, you could relinquish a larger percentage of your savings or even a pension to secure a larger share of the property.
Make sure you know what is most important to you before you begin negotiations. This will give you a much higher chance of walking away with assets that financially benefit you.
