There’s a lot more to separation that learning to deal with a new emotional state or making arrangements regarding your children. In practical terms sorting out your finances can be one of the trickiest areas.
If you and your ex have any joint bank or building society accounts, you’ll need to close them and re-open as individual accounts.
The simple fact is that you’re almost certainly going to have less money than you did before. Where you’d probably been used to two incomes, there will now be only one, and that will be further depleted by whatever you have to pay in maintenance for your child, which can take a serious chunk – possibly a quarter – off your net income.
Living With Less
The very first thing to do is review your finances. There might have been direct debits relating to your old relationship that no longer apply (phone bills, Sky or cable, etc). Make sure you cancel these.
If you’re paying into a pension or an ISA, take a look at how much you’re contributing and consider reducing it. In the long run you’ll want to re-assess, but in the short term, you can probably use the cash for day-to-day bills.
Take a look at exactly what you need to survive each month – rent or mortgage, council tax, heat, electricity, food. There might be very little left over, so you’ll need to set yourself a budget, and make sure you stick to it. If at all possible, try and save some money each week, even if it’s only £5.
Ideally, you should have a cushion of money in the bank, the equivalent of three to six months’ salary in case of emergencies or unemployment. However, in a lot of cases that simply isn’t possible, so saving slowly – and making sure you don’t touch the amount unless it’s absolutely necessary – will help.
If you smoke, this is the perfect incentive to stop – at 20 a day you’ll be saving well over £100 a month, which you can use for other things.
How to Make More Money
It might be worth dusting off your CV and applying for a better job where you can earn more money. You can also look into part-time jobs that will work around your regular hours – but make sure you still leave time for contact with your children. With a part-time job, not only will you be making extra, but you’ll be around a new set of people, which can expand your social life, as an added bonus.
What Not To Do
One thing to avoid is using your credit cards. It might seem like a good option when money is tight, but it’s one that will come back to haunt you. You can quickly find yourself struggling in debt, and forced to turn to consumer credit counselling to extract yourself. Cut up most of your credit cards to avoid the temptation. Keep one for absolute, unavoidable emergencies.
Depression
One side effect of having very little money and constantly struggling to get by can be depression. If you find yourself succumbing to this, go in and talk to your GP. The doctor should be able to suggest remedies, including counselling, that could help alleviate your depression.
Showing posts with label Money. Show all posts
Showing posts with label Money. Show all posts
Saturday, September 20, 2008
Building a New Financial Future After Separation
After separation your finances won’t be in the same shape they were when you were part of a couple. You’ll still have your bills to pay, plus monthly maintenance for your children, and have to do it all on a single income. So how do you work towards financial security in the future?
The Beginning
You’ll find that in many cases you’re starting from rock bottom, with barely enough money to scrape by, and budgeting each penny very carefully. You might well feel like you’re on a treadmill, and simply working to survive. But that’s the ideal time to start planning.
Put a little away every week, even if it’s only £5, in the highest interest savings account you can find. It’s money you should touch only in the event of an extreme emergency.
Be sure you make your credit card payments on time, even if you can only afford the minimum payment. Failure to do so can have an adverse effect on your credit rating which could have bad consequences in the future.
Make a Plan
Consider where you’d like to be financially in five years or 10 or 20. What will it take to achieve that? Be realistic about what it will take, and make a plan to get there. It might require being harsh with yourself, but as long as you have enough to cover your bills and get by, then it can be a workable idea.
If you come into extra money – overtime, a bonus, or even a bequest – salt a large portion of it away in your savings account. When you reach a certain amount - £1000, say – look around for a better opportunity for that money, where it will generate more money for you. Those opportunities vary, and the amount of return varies with the risk. Be conservative, and re-invest what you make.
As Time Passes
Saving can become a habit, and its one well worth learning. However, financial security, even on a small scale, won’t happen overnight. But over the course of several years, if you manage your money wisely, you’ll find yourself on an even keel and moving ahead.
It’s never too early to think ahead to retirement, even if you’re still young. Once you have a cushion of money underneath you (the general advice is enough to sustain you for three to six months, in case of unemployment), you’d do well to think about ISAs and pensions. Read carefully before making any decisions, and invest only what you can comfortably afford; there’s no point in stretching yourself too thin now to assure your future, since you still have to live.
Keep to the practice of living within your means. It might be nice to own a new car, but do you really need one, for instance? Think before you spend anything. Once you’ve paid off your credit cards, don’t take on any new ones, especially store cards, which generally carry a much higher rate of interest. Also, take advantage of deals to transfer existing balances and receive lower interest rates.
Reaping The Fruits
Your circumstances might change, for better or worse, so be willing to be flexible. If you meet a new long-term partner, then obviously your priorities will change a little. But whatever occurs, don’t lose your goal of financial security for yourself.
The Beginning
You’ll find that in many cases you’re starting from rock bottom, with barely enough money to scrape by, and budgeting each penny very carefully. You might well feel like you’re on a treadmill, and simply working to survive. But that’s the ideal time to start planning.
Put a little away every week, even if it’s only £5, in the highest interest savings account you can find. It’s money you should touch only in the event of an extreme emergency.
Be sure you make your credit card payments on time, even if you can only afford the minimum payment. Failure to do so can have an adverse effect on your credit rating which could have bad consequences in the future.
Make a Plan
Consider where you’d like to be financially in five years or 10 or 20. What will it take to achieve that? Be realistic about what it will take, and make a plan to get there. It might require being harsh with yourself, but as long as you have enough to cover your bills and get by, then it can be a workable idea.
If you come into extra money – overtime, a bonus, or even a bequest – salt a large portion of it away in your savings account. When you reach a certain amount - £1000, say – look around for a better opportunity for that money, where it will generate more money for you. Those opportunities vary, and the amount of return varies with the risk. Be conservative, and re-invest what you make.
As Time Passes
Saving can become a habit, and its one well worth learning. However, financial security, even on a small scale, won’t happen overnight. But over the course of several years, if you manage your money wisely, you’ll find yourself on an even keel and moving ahead.
It’s never too early to think ahead to retirement, even if you’re still young. Once you have a cushion of money underneath you (the general advice is enough to sustain you for three to six months, in case of unemployment), you’d do well to think about ISAs and pensions. Read carefully before making any decisions, and invest only what you can comfortably afford; there’s no point in stretching yourself too thin now to assure your future, since you still have to live.
Keep to the practice of living within your means. It might be nice to own a new car, but do you really need one, for instance? Think before you spend anything. Once you’ve paid off your credit cards, don’t take on any new ones, especially store cards, which generally carry a much higher rate of interest. Also, take advantage of deals to transfer existing balances and receive lower interest rates.
Reaping The Fruits
Your circumstances might change, for better or worse, so be willing to be flexible. If you meet a new long-term partner, then obviously your priorities will change a little. But whatever occurs, don’t lose your goal of financial security for yourself.
Subscribe to:
Posts (Atom)