This year, when mediating financial cases, I have noticed a rise in the number of people facing financial struggles and difficulties. The increased financial pressure often results in higher debt which is adding to the struggle. There are several contributing factors, including current economic conditions, costs of living, housing markets and mortgages, education expenses and consumer debt.

A big worry after a separation or divorce is how you will survive financially, moving from having two potential incomes to one, and it can be challenging.

In my previous post ‘Lets talk about money’, I discuss finances in mediation and provide simple steps on the process and how agreements can be made. This post focuses on rebuilding your financial stability after going your separate ways.

Here are some key considerations:

Assessing your financial situation

• Knowing your finances can be empowering and collating everything in one place is a good starting point. You can read more about this in my post ‘Lets talk about money’ which lists the areas of your finances you should understand (assets, debts, pensions, income, expenditure, savings etc).

Creating a budget

• Evaluating your current income and expenses will help you create a realistic budget going forward. Your new budget will almost certainly look different to your previous budget and that can be common.
• You may want to think about adjusting your lifestyle and expectations temporarily and this can be a crucial point in realising your new financial reality. It may include moving into a smaller property or cutting back on certain activities.
• Think about prioritising your needs and if you have children then their needs should be accounted for (costs of covering their basic needs for example).

Expectations and Debt

• People often take on more debt to cover expenses during challenging times or to keep up with a certain type of lifestyle, even if it may not be affordable.
• The impact of external pressures on our lives is constant and it can impact on our decisions. Try to stay focused and be mindful of the direction you are moving in.
• Develop a plan to tackle outstanding debts and sometimes working with a financial advisor can help you develop a long-term financial plan.

Income considerations

• If you are able to and if it’s feasible, it might be a good time to look at options for increasing your income. Investing in education or further training can also increase your earning potential.

Getting Support

• You do not need to manage it all on your own. Emotional stability and your overall well-being is important to maintain when navigating your finances. Seek support from friends, family or support groups if you need it.
• An important factor which is often overlooked, is that individual experiences when it comes to managing finances can vary based on upbringing, financial literacy and employment stability. Don’t be afraid to reach out and ask for help.

Other Considerations

• If you are required to pay any maintenance costs, this can have a significant impact on your financial situation, so ensure you factor these in.
• Review your health insurance coverage and also your life insurance policies to make sure they reflect your new circumstances.

Making any life changes, especially ones not completely in your control is not easy. Think about what you and your family need and make small changes to move in a direction which you feel comfortable with. Find a new path which is sustainable for you and your family. Please get in touch if you have questions or wish to discuss further in confidence.