Depending on your perspective, the end of a committed relationship can feel like the end of an era, or the first day of the rest of your life — or possibly both.
Regardless of how well you are handling the expected or unexpected uncoupling, feeling in control of your own economic outlook can be a big boost in minimizing the financial effects of a breakup. Sometimes this might mean letting go of things you used to value in order to make greater gains overall.
Whatever your end-of-a-long-term-relationship scenario is, it’s important to consider your legal and lifestyle options. The choices you make early on can influence your overall happiness.
Lawyers, Mediators and Armchair Experts
Whether your separation or divorce is highly complex or relatively straightforward, consulting experienced professionals early on may help cut through some of the chaos swirling around you initially.
Friends and family may have your best interests at heart, but despite well-meaning advice, the legalities of extricating lives that were once joined should be done with expert help, not the well-meaning but potentially skewed point-of-view of your bestie.
Getting early advice from a family law attorney or a reputable mediator may be money well spent.
- A divorce attorney can advise you on aspects of law and, should it be necessary, represent you to the other party’s attorney or in court.
- A mediator is intended to be an impartial third party whose interest is in helping both sides come to an agreement everyone can (ultimately) live with related to finances, children and any other joint interests.
Depending on how agreeable all sides are, mediators may be a less expensive option if both parties intend on agreeing on a resolution everyone can live with.
Educating yourself in advance of meeting with a mediator or family law lawyer will help you narrow down and prioritize key questions you want answered.
Most provinces have legal aid websites that offer information on subsidized or free legal advice, and the Canadian government provides an overview of rights for individuals, parents and families when it comes to separation and divorce.
Budgeting a Breakup
Many marriages and partnerships last well beyond a healthy “best before date” largely because of a fear of the financial impact.
Accepting that your financial situation will likely change, can be a major step toward moving forward. Trying to maintain the illusion that your lifestyle hasn’t been affected by a break up may lead to piling on debt, which may prevent you from moving on and bring on future economic hardship.
Have an honest conversation with yourself about your ability to create a new day-to-day budget you will actually follow. If dollar discipline has never been your strong suit, help is readily available, and will help give you an honest picture of your finances and options to consider. A personal finance coach, can help set a plan up for monthly expenditures through the transition period.
For families, there are definite impacts on individual taxes and tax benefits when a family separates. An accountant can assist you in navigating the changes that depending on whether you are providing child support or receiving it, will have implications come tax filing time and may even provide some relief to both parties depending on your scenario.
Building Your ‘Plan B’ Bucket List
There’s a Plan B, or C (or maybe even K…) out there for everyone when Plan A doesn’t work out. If your original bucket list was full of shared ideas around travel or acquiring property with your former partner, that bucket has (literally, in some cases) moved, creating an opportunity for new long term financial goals and aspirations.
Try allocating — no matter how small — a portion of your finances in order to contribute to a new list of life goals and consider the road map to get you there. That might mean considering upping your skill set through education, investing in a small business, even considering unique housing scenarios, like offsetting costs by hosting an overseas summer or full-term student.
Separation and divorce are often approached socially with a sense of loss or even failure. Make a conscious choice to change the narrative when it comes to your own situation by maintaining both an emotionally and economically healthy outlook. A long-term vision on where you want to be in two, five, and ten years will help keep you on track with your desired vision for your new life.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.