Is your divorce or separation creating money problems? Many people find it hard to pay the bills – plus their legal fees – during this time. For example:
- You may have been living on two incomes, but now you are on your own
- Your money may be invested in a house, a property, or a business, and it will take time to get your share
- Your divorce may be complicated, and you will be short of cash until you and your ex-spouse reach an agreement.
No matter what happens, make sure that you don’t fall into one of these three common traps:
1. Falling behind on your bills
Even if you have to borrow money, it’s important to pay the bills. If you don’t, you will have to pay interest anyway. You could also hurt your credit rating, which means you may get turned down the next time you try to borrow money.
2. Making decisions too fast
If you rush or don’t have a plan, you may make costly mistakes with the money you get after your divorce. Before you spend, it’s important to decide what you will need that money for in the future.
3. Doing nothing
Acting too quickly can be a mistake, but so is taking too long to sort out your finances. Here are some of the dangers of doing nothing:
- If you have money to invest and leave it in a bank account, you may miss chances to grow your money. Your may even lose money.
- If you and your ex-spouse still have joint accounts and credit cards, one of you could spend money or go into debt, so be sure to close them down quickly.
- If you delay making changes you need to make, like cutting your costs or getting a new job, you may spend money you need for your future.
- If you plan to claim spousal support, you need to file within two years of separation. If you wait too long, the court may dismiss your claim.
- If you don’t update your will and insurance plans, you may create big problems for your children or other family members.
Remember: Don’t take too long to plan your future after divorce.
Sometimes the worst thing you can do is nothing. You need to make wise, timely choices to help you reach your financial goals. If you’re not sure what to do, or you’re afraid of making a mistake, get advice from an expert.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.