Divorce has a way of throwing everything up into the air – routines, emotions, relationships, stability, sleep – but, for many people, one of the most daunting is money. Not only is it a common cause of disharmony in relationships, but it’s also one of the leading causes of contention throughout the divorce process. Like custody disputes, disagreements over money touch upon some of our deepest-rooted fears, and it can take a while for the dust to begin to settle. 

But the good news is that it can (and will) settle. The right advice will be worth its weight in gold to you, particularly as you work to re-establish your own senses of autonomy and stability. 

At Perennial Wealth, our expertise in tailoring independent and unbiased financial advice to a wide range of circumstances, goals, and concerns has enabled us to help many regain a much-needed sense of control over their money – and, with that, their futures. From rebuilding savings to making shrewd investments and putting in place the right protections to replace worry with surety, our team understands how to face your current challenges head-on.

There’s never a bad time to get in touch and start your journey forward. For now, however, here are a few key tips for anyone who is facing financial turbulence in the wake of a separation or divorce. 

  1. Make a Brand-New Budget

Most of us work to some sort of a budget each month, whether it’s a multi-page spreadsheet of colour-coded entries and fields or a mental balancing act based on a few personal rules or guidelines we came up with to avoid wandering into the red each month. Of course, the latter is never the best idea if you want to ensure you’re optimising your incomings and streamlining your outgoings, but it’s still relatively common and, provided nothing drastic changes (either in terms of what comes in, what goes out, or what your goals are) it can keep things stable. 

But a divorce certainly falls under the remit of ‘drastic changes’ and trying to bend your budget into a new shape rather than going back to the drawing board and starting from scratch is never going to yield the best results. 

Yes, the idea of starting from scratch is incredibly daunting, particularly when you’re starting from scratch in many other areas of your life – your home, your social circle, your relationship – all at the same time. 

But a brand-new approach affords a brand-new perspective. It avoids the sense that you’re merely working to ‘cover the cracks’ or compensate for lost income here or new expenses there. 

But it’s not just about giving your mindset a boost. Drafting a brand-new budget means you have the opportunity to identify areas where you can strengthen your finances, particularly if you’re working alongside an experienced financial advisor. 

According to FinCap, almost 40% of UK adults don’t feel confident about managing their money. That is a massive proportion of the general public who are likely facing the coming weeks, months, or even years with some degree of uncertainty and, in all likelihood, concern. 

This new chapter doesn’t need to feel like an extension of the last. It’s not a case of patching the cracks but of building a new wall altogether, and that’s a process we can guide you through. 

  1. Don’t Fixate on the Bigger Picture

Divorce means a lot of changes all at once, and it requires you to feel very sure about a very unsure future. The financial aspects alone are daunting and, together, represent a very heavy weight on your shoulders. 

But seeing those individual financial challenges and considerations as a collective is one of the worst things you can do. It makes things feel instantly unmanageable – the sort of problem to which the only solution is burying your head in the sand and hoping you get through it as smoothly as possible. 

In theory, the downsides to that approach are obvious – but when you’re in the midst of it all, the path of least resistance certainly offers its own temptations. 

Breaking things down into manageable parts is easier said than done, but it’s something we have a great deal of experience with at Perennial Wealth. 

Addressing your day-to-day living costs comes first. Rebuilding your savings (that vital ‘rainy-day fund’ that is so easily depleted during divorce) can’t be resolved immediately, but it can be factored into your monthly budget.

When those ingoings and outgoings feel stable, you can begin to pan out – consider insurance and protection, along with getting more out of your savings by building an investment portfolio that begins to lay the foundations for the longer-term. 

This won’t all happen in one session, but it doesn’t need to. The sooner you can start thinking about those individual parts, the better. 

  1. Don’t be too Quick to Split the Family Finances

Asset distribution is complicated, and it’s a common misconception that divorcing couples simply have to split the finances and assets 50/50. Some couples may find that negotiating with one another and agreeing to terms they both feel are fair is relatively straightforward, but this isn’t always the case. Even if the decision to divorce is a mutual one and your relationship feels amicable, it should come as no surprise that money talks can very quickly turn those sentiments sour. 

Mediation is the next big step and is strongly recommended for any separating couple. With an objective and knowledgeable third-party present, talks can remain productive and free from the emotions that a discussion in the former family home can entail. A solicitor is generally the best mediator for these talks. 

If negotiations feel difficult or emotionally taxing, then consulting with your lawyer is very important. They understand the ins and outs of asset distribution and all the laws and regulations that surround it and can take over the negotiations on your behalf to ensure you achieve the fairest outcome possible. This rarely looks like a perfect split down the middle, so don’t be too hasty about agreeing to your partner’s proposed terms. 

There are plenty of steps between where you are now and a lengthy court battle, so don’t be afraid of reaching out to a divorce solicitor.

  1. Consider Downsizing

There are plenty of reasons why you may be tempted to keep the existing family home – particularly if you have children to think of – or to find a home that feels comparable to the one that came before. Most of us are reluctant to take steps backwards when we can avoid it – and opting for a property of smaller size and lower value can certainly feel like a very big step back. 

But downsizing offers more opportunities to rebuild, both from a financial standpoint and an emotional one. Don’t dwell on what it might represent to an outsider. Instead, embrace it as the fresh beginning it is – and the huge service it does for your future. With your savings account revived from the proceeds of your home’s sale, you can work on building your investment portfolio and coming back stronger than ever.

2023 market trends have seen many buyers downsizing to homes with fewer bedrooms, opting for properties that create more space for financial stability. This, combined with the opportunity for a fresh start with your surroundings, can be one of the best decisions you make at this pivotal time. 

  1. Don’t Expect Everything to Fall into Place at Once 

Very few people are able to go through a divorce and feel totally financially secure in the immediate aftermath. But security doesn’t just come from having plenty in the bank – it comes from knowing that you have control over many more variables, questions, and unknowns. That’s what a solid financial plan is all about. 

But actioning the right plan will take time. As we mentioned above, breaking the topic down into its individual parts is by far the best approach – much better than rushing yourself to do everything, save everything, pay for everything, and secure everything all at once. 

Divorce is a step toward a new life, but it won’t change everything overnight. Take the pressure off your own shoulders by accepting that, for the time being, some things will feel uncertain or unstable – but there are always opportunities for progress. There are always practical ways to address money stress

At Perennial Wealth, we know how hard it can be to feel financially secure when nothing else feels stable. Our expertise has enabled us to empower many clients who once came to us feeling as though they’d reached a dead-end in terms of their financial opportunities, only to realise that the door is never closed on making progress. 

Nevertheless, you need to be sure you’re taking the right approach under the right guidance. Tips and guides are a great start, but they can only ever take you so far. For solutions that are truly tailored to your own circumstances, our team is always there to guide the way. 

Get in touch with us today to make that initial step forward.