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In today’s post, I’m tackling money and divorce which is a really big issue. We had a fantastic session in our Facebook group recently by specialist financial adviser Ceri Griffiths, who helps women to navigate their money situation when going through a divorce.
It’s SO important to have somebody on your team you can rely on at a time like this. You’re going through a really complicated process, and having someone like Ceri means you’re not going to be left behind, or to miss out on what you could be entitled to. If this is sadly something you’re going through right now, please do check her out.
In this post, I’ll summarise the main points we covered so that you can do some research of your own, and speak to someone in order to get things moving in the right direction.
Marriage or Divorce: It’s Your Financial Future
So firstly, before considering divorce — perhaps even before marriage — you need to think about your financial future and any potential outcome. I’m not saying this to be all ‘doom and gloom’.
I’m also not saying that as soon as you’re in a relationship with somebody, you should be planning for a possible divorce. Obviously, we want our relationships to be amazingly awesome and last forever.
It happened to me
BUT, let’s just say yours doesn’t. What will you do? What do you need to consider to make sure you don’t leave that relationship worse off than when you started? This situation deeply resonates with me, because I was engaged to be married, and my relationship broke down. It ended with me walking away owning basically nothing except my clothes and my books.
In hindsight, perhaps I was really naive. We had a house together; maybe I should have pushed more to be on the mortgage. Unfortunately for me, it just didn’t work out like that because before we broke up, I’d just gone along with what worked at the time. But I really wish I’d known about this stuff before I walked away, so I could have been better supported.
How to Manage Your Finances as a Couple
Before you get into a relationship or rush headlong into marriage, you need to be thinking about your finances as a joint venture. I’m not saying that you have to completely mould your finances together, but certainly think about how you’re going to manage your money as a couple.
Do you want to pool your money together? Or do you want to keep your own money separate?
Splitting the Bills and Budgeting
You might consider a joint account where you put your money in together to cover the bills, for example. That’s fine if you’re both earning roughly the same amount of money. But if one of you is earning significantly more than the other, then you need to have a discussion about how much money each person deposits into the account.
It would be unfair if one of you is earning less but is contributing the same, which can cause resentment. That person might find themselves unable to buy things they need or want, to go on holiday, pay a personal bill, or just have some fun. So, budget together, understand how much you’re both bringing in and how you’re going to break your finances down.
Also, plan some regular check-ins with each other. Decide how often you’re going to get together to manage your money. Are you going to budget weekly, or monthly? Plan how often you’re going to have a general open discussion around your joint finances.
Credit Scores, Debt and Financial Links
Your credit score gives you an indication of how well you’re both doing financially. If one of you has a really bad credit score, and a history of (or existing) debt, there may be a temptation to take on new debts on your partner’s behalf.
But as Ceri shared in her presentation, that’s a really risky thing to do. Because, if the relationship breaks down and the debt is in your name, you’re the one liable for it, not your ex-partner. So think really, really carefully about taking on new debts for your partner.
The other thing you have to be aware of is that opening a new joint account can have a negative impact on your credit score if your partner’s score isn’t so good. Joint savings accounts are ok, but a joint credit card or current account will affect your score — and credit reference agencies do look at this.
Consider a Prenuptial Agreement
The other thing to do before you get married is to consider having a prenuptial agreement in place. This isn’t something everybody does or feels is necessary. But if you do get one drawn up and later find yourself going through divorce, you’ve already got a clear idea on what you’ll both take away from the process.
A prenuptial agreement isn’t legally binding and it’s not something that is guaranteed at the point of divorce, but it certainly makes life a lot easier and much clearer. Have a look into that and see if it’s something you can get a solicitor to write up for you.
Dealing with Money and Divorce
What do you do when you’re actually going through a divorce? Or you’re leading up to that point where you decide that the relationship is broken and you can’t move forward anymore? You need to get really clear. You need to know how much money you’ve got coming in, and how much money you’ve got going out.
Do you know what your partner’s income is? Hopefully, before you got married and in the early days of your relationship, you had these discussions. Because it’s always better to be open and honest with each other as much as you possibly can. Know where you’re starting from. How much debt have you got? How much debt has your partner got? These are the sorts of questions that solicitors are going to ask you.
You can get in touch with a solicitor for a free discussion to talk about your options, including different scenarios and potential outcomes. You could then employ someone like Ceri who can look at your finances and help you plan for the future.
She can help you to not just look at your current situation, but also help you to plan for your retirement, and support you when making important decisions. It’s always helpful to speak to a planner who specialises in divorce, like Ceri.
Don’t Forget Your Will
When going through divorce, you’ll have to disclose your finances. And everything will come out in the wash, as they say. Decisions will be made about who gets what, and how money and assets are split. You’ll need to make decisions about your pensions, your life cover and your will.
Make sure you update your will. Be really careful here because if you die and you haven’t changed your will, your new partner gets nothing. It would all go to your ex-partner. Be sure to confirm who will benefit from your estate when you die.
Finalising your Financial Future
Once a settlement is agreed, each party gets clarity on who gets what. Your solicitor and planner are there to ensure you won’t be left out in the cold, and hopefully, it wasn’t a long, bitter and horrible process.
And now, you get to plan your new life!
You’re not in that relationship anymore. You’re free to rediscover YOU. You might try a new style, or move to a new location, or change your career. There are so many choices.
After divorce comes the opportunity to rise from the ashes like a phoenix. You have the chance to experience the life you’ve dreamed of. Make choices you’ve been unable to make in your previous relationship.
Admittedly, it’s a horrible time. But also, it can be a really encouraging and happy time once everything’s done and dusted. You’ve parted ways; now you can move forward. Obviously, it’s not so easy when you’ve got children and you do need to negotiate around that.
But hopefully, the preparations you made before you got married and the steps you took when going through your divorce made the process amicable, enabling you to move forward with grace.
In Summary
I hope this money and divorce piece was useful to you. If you’re in my membership, you’ll get full access to Ceri’s interview, which you can find in the archives. If you’re not, it’s an awesome library, full of amazing resources and you should come and join!
If you want to find out more information, or just want to talk through your next steps with your finances, please get in touch with me for a free 15 minute chat. I look forward to meeting you there, and will catch you again soon!
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