The Best Financial Success Secret for Surviving Divorce
Lack of finances can be one of the biggest sources of fear when going through a breakup. This is particularly true if children are involved. The trouble is, very few people actually know what their spending habits are. Approximately 5% of people live off of a budget - and that 5% tend to be the most successful with their finances, regardless of their income. As for the rest of us, we spend and hope it all works out, living month to month.
Not having one's financial situation under control creates primal fear. The survival instincts that kick in around this can make rational negotiation and decision making next to impossible. Before you move forward in working on you divorce settlement, spend some time understanding the big picture of your finances. Here's how:
Maybe you've never had to work out a budget before, but trust me, this is one of the best things you can do to shift your mind into a clear and reasonable state for decision-making. When negotiating your Separation Agreement, you need to be your 'best self' to get the best results.
I've worked with clients who make as little as $20,000/year all the way up to $200,000/year or more. Guess what? Almost every single one of them had no money left at the end of the month! It's not about how much you make, it's about how you spend it. This should be the first clue that individuals really need to take 100% responsibility for their own finances.
In the case of divorce and separation, you'll probably need to begin 'mindfully' spending your money ie: consciously evaluating your spending practices. Most people spend unconsciously. By that, I mean that they buy stuff even if they don't need it until their funds gets dangerously low or they've maxed out the credit cards. Don't.
To help you in your budgeting success, I've created an amazing FREE package to get you started. It's my FRWE Divorce Budget Planning Package and it includes a video from my paid course and the accompanying work sheets. To get this awesome tool COMPLETELY FREE, go here:
Income Sources & Benefits
Understanding your potential sources for income is critical for proper budgeting. In my experience, the parent with primary residency (where the kids will live most of the time) often panics because they don't have the big picture on their income sources.
Parenting on your own means reduced taxable income and increased government benefits. In mediation, I use software that can output the projected monthly benefits that will come in, but you can find this out by visiting sites such as the Government of Canada's Child Benefit Overview. In Canada, you may be entitled to a GST refund also. In Ontario, parents can apply for the Trillium benefit.
What's more, if your children have been involved in sports or other extracurricular activities, you may be eligible for bursaries, reduced rates or funding programs such as JumpStart that can help you keep them involved in the activities they love. Personal fundraising is an option here too; you're only limited by your imagination when it comes to ways you can provide opportunities for your kids.
If you're the support-paying parent, look for tax breaks that you might be eligible for. A good tax-preparation specialist should be able to help you with this.
In addition to your regular income, tax breaks and benefits, you might want to consider a side business that you can either run passively or with a little extra effort. This is especially ideal if you're the access parent and now have some time on your hands. The internet is flooded with viable ways to do this and your local Chamber of Commerce or Futures committee can be an invaluable source of free information.
The Wrap Up
Before you go into any kind of negotiations around your pending separation or divorce, please take the time to work out the big picture of your financial situation. You owe it to yourself. Ultimately, you'll be responsible for making your new life work for your kids and yourself. Your mindset will make or break how successfully you move into your future.