In 2004, Investors Group took a small poll of divorced Canadians. Most of those surveyed said they believe divorce is, financially speaking, the most costly thing that can happen in a person’s life. Many also said that they were not prepared for the financial fallout after their divorce:
- 35% had to go into debt
- 22% had to ask for financial help from friends and family
- 28% had to sell household items or personal assets
- 27% had to sell or redeem investments.
How do I avoid money problems after a divorce?
- Create a new budget. Your income and expenses will likely change after a divorce. If you need money to pay the lawyers or other bills, look for ways to cut your spending, at least for the short-term. As soon as possible, start saving money, no matter how little each month. Avoid spending your retirement savings except for a true emergency.
- Reassess your financial goals and create a plan to achieve them. If saving for a vacation was important before, it may move down the list if you have to buy a new home or go back to school. Whatever goals you choose, you need to create a plan to save and invest to reach them.
These stories illustrate how good planning can help you avoid money problems:
Handling a smaller divorce settlement: Lori and Len's story
When Lori and Len divorced, Lori invested her lump-sum payment, while Len spent his. To see how they ended up, read: Handling a smaller divorce settlement: Lori and Len's story
Handling a larger divorce settlement: May and June's story
These two sisters got divorced about the same time. May got more in her settlement, but June came out ahead in the end. Why? Read: Handling a larger divorce settlement: May and June's story Remember: You don’t want to make hasty decisions.
If you’re not sure what to do, you can put your money in some short-term investments, and give yourself some time to decide what to do with your money. If you need it, get professional help.
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.