Along with the death of a loved one and major illness, divorce is among the top five most stressful and traumatic life events that anyone can experience. Going through a divorce usually involves immense feelings of uncertainty, vulnerability and guilt, not to mention the major financial impact on all those involved.
While a divorce is mainly about severing ties, it’s also about starting over and rebuilding your life. This can be a tough and tedious journey, especially after a great financial knock. Therefore, it’s vital to have a well-planned financial strategy in place to assist you through this journey.
Remember, after a divorce, your financial goals will change which means your financial plan should be reviewed as well. Here are six tips to assist you in setting up a proper financial plan to support your new start.
- Review your income and expenses
After a divorce, your cost of living might change drastically. Over and above your lifestyle changes, there might be new expenses you have to budget for, like child support payments, additional household expenses, and the cost of renting or purchasing a new residential property. Take time to review your current monthly budget and adapt it to your new lifestyle. An expert financial planner would be of exceptional value here to guide you through the process. Click here to learn more about Cornerstone Financial Planning.
- Review and draft a new will
Most married couples will nominate each other as sole heirs to their estates. Sadly, many people forget to update their wills after a divorce, which rakes havoc if one party passes away.
Fortunately, the Wills Act of South Africa has made provision for situations like this. The Wills Act states that if you pass away within three months of your divorce and you have not updated your will, your former spouse is not automatically entitled to inheritance, even if he/she was the sole heir.
However, the Act further states that if you pass away after three months of your divorce and you have not updated your will, it is assumed that you deliberately left your will unchanged and
wanted your former spouse to inherit your entire estate.
It is therefore vital to update your will shortly after your divorce to ensure that your affairs are in order and your last wishes are fulfilled.
- Plan your career
In most cases, your income will change after a divorce and you will now function as a single income household. If you were not employed during your marriage, you will need a new source of income and therefore searching for job opportunities is imperative. If you were employed, you need to ensure that you keep earning a stable and increasing income, which could mean re-assessing your career goals. Although planning your career afresh can be scary process, try to embrace it and see it as an exciting opportunity to learn and grow.
- Don’t forget medical aid
Many married couples share a medical aid where one party is the main member and the other is a dependant. If you were the latter, you will need to get a new medical aid for yourself and possibly for your children (if they were dependants too). Do enough research and make sure you choose the right option for your needs and avoid taking enormous and expensive medical aid plans due to fear or uncertainty. To help you to choose wisely, it is highly advisable that you appoint a qualified healthcare broker that will be able to give you expert advice and answer any questions you may have. Click here to learn more about Cornerstone Healthcare Consulting Services.
- Check all your insurance policies
After a divorce, your insurance policies will probably have the most changes out of all your financial solutions. Whether it’s car insurance, life insurance or household insurance, you will need to update each and every policy to ensure that you are adequetly covered. Some things to keep in mind:
- Are all the contents insured under your policy still legally yours?
- Do you need a new short-term insurance policy for new items purchased?
- Have you updated your address, telephone number and banking details?
- If you had a joint life insurance policy, have you separated it and updated the beneficiaries?
- Have you reviewed your financial plan and ensured that you have sufficient death and disability cover in place?
Once again, having a specialised short-term insurance broker by your side, will greatly ease the process of updating your insurance policies. Click here to find out how Cornerstone Insurance Brokers can help you out.
After a divorce you want to start afresh and get on with your new life as soon as possible. Don’t let a badly set up financial plan hold you back. Contact us today for expert financial planning advice and leap into your new life without financial hassles.