You’ve gone through a lot of soul searching and heart-wrenching decision making and know you want to separate but there is one thing holding you back – your fear and uncertainty about how you will afford to live once you do leave.
Or, perhaps, you are like my client, Jennifer, who came to me after she’d been separated for 12 months and during that time had been scrimping and ‘making do’, barely getting by, on very limited income?
Despite the advances that women have made in the world of work and financial independence (hey, once upon a time we weren’t allowed to own property!), the fact remains that one of the largest struggles women have on separation is making ends meet financially. This keeps us in relationships that we would rather not be in. It takes from us our sense of independence. It means our futures are harder financially. There is lots of research around that backs up what you’ve probably seen among your friends and acquaintances – that after a separation, women struggle financially, often never recovering, while their male exes financially recover quicker.
But, it is not all doom and financial gloom! There are achievable actions you can take towards meeting your financial needs after separation.
Get real about what you spend – whether you are thinking of separating or are already separated, getting real about what you actually spend is critical. If you do nothing else from this blog, do this!
Gather up the bank statements for the last 12 months of your marriage or relationship for all the accounts that spending is made from (credit cards and bank accounts). Go through these to identify the amounts spent on key areas of expenditure and note these all down.
Now that you know what your expenses were, use this information to create a list of what your reasonable expenses will likely be. You will need to adjust this to factor in that you will be spending on less people. For example, your grocery spend during the marriage will include groceries for your spouse whereas after separation this won’t be the case. You will also need to adjust for your reasonable accommodation costs if you are planning on living somewhere other than the family home.
Why do I recommend you identify your expenditure from during the relationship when you may not be able to afford to spend like that on your own income? There are a couple of reasons for this – firstly, it is a realistic snapshot of what you are used to spending. You can adjust it later but it gives you a more realistic basis for a budget than simply plucking "best guesses" out of air. Secondly, in many jurisdictions, when looking at financial support issues, the law requires there to be some consideration of what the usual level of expenditure enjoyed during the marriage or relationship was.
Yawn, I know, I know. This can be a tedious, I’d-rather-watch-milk-turn, task but I cannot stress enough how important it is as a starting point. Generally, the quicker this is done, the quicker you can confidently resolve your financial matters. It gives you reliable information to base your future budget upon. You likely will discover areas you can make savings on (“I spent THAT much on coffees and takeaways?!?”). It also gives you solid information on which to base discussions or negotiations with your spouse about financial issues after separation and, if need be, to provide to your lawyer.
Trim the Low Lying Fruit – can you see easy adjustments that you can readily make to your expenses (remember those coffees and takeaways you were shocked about how much you spent on!)?
Are there subscriptions or memberships you are paying month after month but not actually using using?
More affordable alternatives to some expenses may provide other benefits– I had one client give up her weekly gym membership in favour of joining a free local walking group and doing exercise with friends. She was able to save money but it also gave her increased social connection and new friendships.
Look out for debt repayments or retirement savings contributions that you are making at a higher level than you are required to pay. As a short term, stop-gap, measure you may be able to negotiate a holiday from some payments.
Explore Child Support – If you have dependent children who you will be caring for part, or all, of the time, get information about the child support you may be eligible to receive. In most areas, there are easy online calculators that you can use to get this information. If that is not an option, you may need to get advice from a financial professional, a lawyer or by calling the government agency responsible for child support.
Are you Eligible for Additional Maintenance or Alimony? - depending on your spouse’s income and financial position, you may also be eligible for additional payments of spousal maintenance or alimony to assist you to meet any shortfall between your income and your expenses. My client I mentioned earlier, Jennifer, was shocked to discover she had been barely surviving when she actually could have been receiving maintenance payments.
Generally, payments of alimony or maintenance won’t go on forever. The payments are intended to see you through until you can establish the ability to financially provide for yourself. Again, you can find information online but further information and an assessment can be completed by a financial or legal professional.
What can you access now? Take a few moments to make a list of the financial resources that are available to you:
Do you have any savings, of your own or with your spouse, that you can access to help you pay initial rental costs or to meet your immediate expenses. Some “wash up” when you settle your property matters in the future will likely occur that takes account of your withdrawal or use of these monies but, for now, your immediate need is likely to be accessing funds.Do you have a line of credit that you can use to assist you at this time? If so, this may be an option if you are comfortable with what this will cost you in terms of interest and that you will be able to repay it from a property settlement that you will receive in time.Do you have parents or other family who are open to supporting you by lending you money in the interim?Do you have funds in a retirement savings plan that you are able to access in situations of financial need or hardship?If you are working, are there options for working some additional hours so that you can put that extra income aside as a nest-egg for your separation or, if you are already separated, to help you with your immediate needs.
Consider Other Income Sources – Depending on where you live, there may be other sources of income or support available to you. These may include: grants or loans to fund legal costs, tax credits, supplementary income to assist with accommodation or child care costs and state benefits.
Again, making enquiries and finding out exactly what you may be entitled to gives you valuable decision-making information. Many of my clients feel anxious or embarrassed about seeking such information and never imagined themselves being in that position. However, it is likely you will only need this assistance for a short time and in the future, you will likely pay it forward in some other way!
Make a Plan about Work – On a separation, particularly one that you have had thrust upon you by your husband or spouse leaving you, it can seem all too overwhelming and scary to think about going back into the paid workforce or changing your career. However, even if you qualify for alimony or maintenance or other income support, at some point you will want to start planning how you can support yourself and what you need to do to get there. I'll cover this more in a future blog soon.
Get Assistance – if it all feels too much, get help! You don’t need to do this alone. Getting it done is more important.
Perhaps you have a friend or family member who is savvy with money matters and is a whiz with Excel spreadsheets (you know – the one who spreadsheets EVERYTHING).
Do you have a colleague who is brilliant at negotiating pay rises who can help you prepare for a negotiation with your employer.
In many areas, there are free budget advice services that can assist you to prepare a budget and, if need be, help you manage and stick with your budget.
Perhaps now is the time to invest in some time with a career coach to help you work out the best employment options for you.
Start Now – wherever you are at in your separation journey – contemplating leaving, or well down the road – I know this to be true: waiting to start to take control over your financial matters will not serve you.
Putting this off will only see you trapped. Trapped by choices that are limited by how you see your financial situation. Trapped by a lack of information. Trapped by the daily stress about how to meet your expenses. Trapped in a relationship you can't see a way to afford to leave.
All of my clients, no matter where they have been in their separation, have discovered one gem that helps them when they take these steps. Doing them will give you information and with that, comes clarity around your financial options and confidence moving forward.
I’d love to hear your stories of how you’ve managed to financially get ahead after a separation or what you are struggling with right now. You can drop me a comment or come on over to my closed (so no one outside the group can see) Facebook group, The Divorce Lighthouse Group and share with us there.