Divorce can have a substantial impact on an individual’s financial position, especially where finances are involved and were a settlement agreement has been reached by both parties.
Ester Ochse, Product Specialist at FNB Wealth and Investments says, “while this could be a very difficult time, 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 in the right direction over a long-term period.”
Ochse unpacks areas that need to be prioritised when embarking on a new financial journey:
1. Budget. 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 at the end of the month.
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2. Will. Update your Will after a divorce to ensure that your assets are allocated to the beneficiaries you want. “There is a three-month grace period to update wills, once the grace period lapses and the Will hasn’t been changed, the previous Will, will come into effect,” says Ochse.
3. Insurance. It is advisable to reconsider your insurance needs. For example, if your ex-spouse was responsible for covering house and household contents insurance, you will need to get your own policy to ensure that your possessions are protected against unforeseen circumstances. Furthermore, update your insurance details such as life cover to reflect the names of your preferred beneficiaries.
4. Retirement goals. After a divorce, your retirement goals may change depending on what you and your ex-spouse plans were for retirement. You will 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,” adds Ochse.
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5. 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 tough period, consumers are advised to be extra cautious about how they handle their financial affairs. 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.