While there’s no getting around the hurt and pain of separation or divorce, understanding the financial implications of a break-up can save you time, money, and grief – and the sooner you consider how your finances will be affected, the better.  If your spouse handled the money in the family, it’s crucial that you begin your financial education well before you start your legal negotiations so you can level the playing field.

Here are some financial action steps to consider as soon as you know that separation or divorce is likely:

1. Ask for help.  Although you might have to bring in lawyers, accountants or actuaries at some later point, your immediate financial priority is to find a trusted friend, relative, or professional financial advisor to serve as a financial support person — someone that can help keep you balanced and focused;
2. With your support person, prioritize your financial concerns and issues. Making a simple priority list is not only practical it also helps minimize the strong emotions that might otherwise cloud your judgment. Ask yourself:
   • Do I have enough cash available to cover basic expenses – and for how long?
   • What bills are urgent — rent or mortgage payments, child care expenses, insurance payments – and what can wait?
   • What expenses need to be covered in the near future (post-dated cheques, scheduled bank withdrawals, tax payments)?
3. Once your immediate financial needs are dealt with, it is time to determine what professional financial or legal assistance you might need. Do you already have an “independent financial advisor” to help you? If not, ask for referrals – ideally from someone who has recently been separated and is in a similar financial situation to yours.  Same goes for a lawyer.
4. Before meeting with your potential advisors, collect all of your financial information — including Assets (cash, bank accounts; real estate; household effects; vehicles; investment accounts & stock certificates; RSPs; pension plans; other investments; receivables, business interests, and inheritances) and Liabilities (bills; mortgage; lines of credit; credit cards; personal loans, car loans and leases) held separately or jointly with your spouse or partner. Make sure the information is as up-to-date as possible.
5. Summarize your assets and liability information by creating a Net Worth Statement so you have a full picture of your finances.
6. Consider what your expenses will be when you are living on your own.  Start by looking at how much you have spent in the past then make adjustments for your change in circumstances.  Collect this information on a Spending and Savings worksheet.
7. Locate recent tax returns, life insurance policies, wills & powers of attorney, safety deposit boxes and other legal documents.  You will need this information for your advisors and to update your post-divorce financial plan.
8. Have your financial advisor help you figure out what type of financial settlement you will need to protect your financial security.  Then work with your lawyer to figure out what’s possible legally and how best to divide assets.

Divorce is traumatic no matter how much goodwill is still remaining or how much money is at stake.  The decisions that you make during this time can have a significant impact on your future financial security so take the time to educate yourself and refuse to be pressured or rushed into important financial decisions. The next stage of your life may depend on it! – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.