Let me share a story with you about Mary and money management after divorce.
Mary is a client of mine. When she was married, her husband managed most of the bills and organised the majority of their large financial commitments, including the mortgage and their insurances. They made joint decisions when it came to where they went on holiday and what new car they purchased. Mary did the weekly shop to keep the fridge full and food on the table. She looked after the children and cared for their home. She knew what the family had in place, as a couple, but trusted her husband to make most of the financial decisions for them. Mary is just like many women in the world, who, when they get divorced have to start to understand a massive subject which they have had little involvement in before: finances and financial planning.
Divorce is difficult enough but this can be all the more daunting when it also involves setting up a new home and being cast into a financial world in which you have not previously been involved.
Some of this is made more complex by the way the information is presented to men and women. When making financial recommendations, I find that men tend to base their decisions mainly on statistical information, whereas women often want to know more about terms and conditions, flexibility, etc.
Mary found it helpful to breakdown her tasks into sections. 1) Bills and monthly commitments 2) income required 3) short term goals and expenses i.e.: holiday and cars 4) protection and health insurance 5) long-term investments and pensions. One wasn’t more important than the other but this helped her to compartmentalise her life.
Mary received a lump sum and two investment properties. This gave her an income together with her child maintenance by court order. We were able to work out from the properties and her rental income, the net income she would receive. She brought a property to live in for cash. From there we were able to list her expenses and any longer-term purchases. This gave us a budget to work from for financial planning.
Working as financial planners, it is our role to assist in all elements on the planning and to assist clients with the decisions we are asking them to make. Money management after divorce – contact us or our see our Money Makeover Program here!