“Love is patient and love is kind,” as the popular wedding verse goes, but when love is no longer enough to keep a family together the result is an experience shared by hundreds of thousands of Canadians each year: The end of a long-term relationship and the start of new financial narrative for everyone involved.
While the emotional implications can be worked through over time, the financial realities of separation and divorce may be felt almost immediately. Experts often suggest that during significant transitional life moments like divorce, major life decisions — financial or otherwise — can be difficult to consider objectively. In the meantime, there are small but practical steps you can take to help you feel more in control of your life.
Get Personal, with Personal Banking
If you kept your finances separate while you were in a relationship there may be fewer decisions to make immediately than if your bank accounts, credit cards and lines of credit are fully entwined. Whatever your scenario, having up to date, proper records and keeping track of your current balances, withdrawals and expenditures in any joint accounts, investments and savings plan should be a priority.
Give Credit, Where Credit is Due
Having access to a healthy (but not excessive) line of available credit under your name should be another priority. Access to capital can be a critical asset – even if there isn’t an immediate need for the funds right now.
Depending on your future housing scenario(s) and the timeline for working out living arrangement logistics with your former partner, the ability to draw on a secured line of credit as needed may provide some serious peace of mind. Having access to funds for first and last month rent, for example, may help alleviate your financial stress in the first few months.
Settle the (Credit) Score
Verifying the health of your personal credit score should be a habit followed regardless of your marital or relationship status, but it has added importance when you are starting out on your own again financially and may need access to credit for financing a car, applying for a lease, a mortgage or even putting utilities under your own name.
If you haven’t checked your score in a while and find yourself with a lesser rating than anticipated, there are ways to improve your own personal credit scenario.
Simple ways to improve your score can be started immediately by paying all bills on time — particularly when it comes to credit cards — and paying at least the minimum amount due. Although it may seem counterintuitive, responsibly using more of your credit may help you achieve higher gains on your overall score. Keeping a low credit card balance is another step in the right direction.
Improving your credit score will take some patience and realistically won’t happen overnight (unless you find errors or discrepancies in your report, which is why it is important to review yours regularly). Putting in place good financial habits as you start out on your own journey will set you up well for the long term.
Making a House, a Home
Change is inevitable when it comes to the end of a marriage or long-term relationship, and adapting to the idea that one or all of you will move is one of the biggest adjustments to get used to in the beginning of a relationship unravelling.
Each new and different living scenario will have an impact on your finances and potential long-term financial health. While your life is moving in a new direction, it may not be the best time to splurge on renting a penthouse condo downtown, or suddenly move to the suburbs. Deciding practically on what situation works best for the immediate family members, and ignoring all the well meaning but uninformed advice, is a good start – especially if there are children involved.
Shared dwelling scenarios have the kids remaining in the home they’ve grown up in, with their parents coming in and out during their time period with the kids. This usually works best with reasonably amicable couples that can share the same space and co-parent effectively from the start. If you need to sell or move from your primary home, ensure a temporary agreement is drawn up regarding proceeds of a sale, as well as who covers the moving costs and real estate lawyer fees so everyone has an upfront understanding. The same applies if one spouse intends on buying the other out of a property that is currently jointly owned.
Regardless of your situation, the financial realities of separation can feel as if they affect every part of your new life. Whether you are adjusting to the idea of selling what was once your dream home, or finding relief in settling in a new space of your own, taking a few significant & positive steps now, can help you feel more in control of your 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.