Divorce can have substantial impact on an individual’s financial position, especially if finances were involved in the relationship and there was a settlement agreed by both parties.
Ester Ochse, Product Specialist at FNB Wealth and Investments says, “while this could be a very difficult time for individuals, this doesn’t mean that you must forget about your financial future. It is advisable to relook your financial position holistically and start a financial journey that will put you at the right position over a long-term period.”
Ochse unpacks areas that needs to be prioritised when starting your new financial journey:
Budget: the first thing you need to do is look at your budget now that there are no longer two incomes taking care of household needs. Relooking your budget will enable you to identify and prioritise negotiable and non-negotiable expenses so that you are able to meet all your household needs.
Will: it is important to update your Will after a divorce to ensure that your assets are allocated to the beneficiaries you would like to benefit in the unfortunate event of your death.
“There is a three-month grace period within which individuals are allowed to update their wills, once the grace period laps and the Will hasn’t been changed, the previous Will come into effect again,” says Ochse.
Insurance: ensure that you update your insurance such as life cover to reflect the names of the beneficiaries that you would like benefit in the unfortunate event of your death.
Retirement goals: once you are divorced, your retirement goals might change slightly depending on what you and your ex-spouse plans were for retirement. Therefore, you need to re-evaluate your goals and ensure that you are making enough contributions to retire comfortably.
“This is especially important if you had to share your pension contributions with your ex-spouse in the divorce settlement,” says Ochse.
Emotional and physical well-being: more often, people make unwise financial decisions in moments of heightened emotions or weak physical health brought on by stress. As difficult as this may be, is it advisable that you approach your financial affairs in a balanced and objective way to avoid making financial decisions that you will later regret.
“In this very difficult time, consumers are advised to be extra cautious about how they handle their financial affairs. Therefore, it is highly recommended that they enlist the services of a certified financial advisor and seek counselling to ensure that they approach their new status with a holistic, balanced, healthy and positive mindset in order to safeguard the future of those who depend on them,” concludes Ochse.