How to Gain Financial Independence During a Relationship Transition

A breakup or divorce can massively upset your finances. Depending on the marriage separation agreement, it might take time to get your finances back together. In this post, we’ll show how to maintain or reclaim your financial independence when a serious relationship ends. 

Rebuilding Your Budget

If you’re used to splitting costs with your partner, you’ll have to rethink your whole budget. Even if you, for example, keep the home, you might not be able to afford it. Your only option might be to sell the house and find somewhere smaller-scale, possibly even a rental.

Even if the transition isn’t final yet, take stock of the following:

• Your assets
• Your liabilities
• Your income
• Your expenses

You’ll also need to build your emergency fund. Ideally, you’ll already have a substantial amount saved for personal use. Even so, without the safety net of a partner, you must commit to adding to your savings more than ever.

Roughly 20% of your income should go towards savings. Keep building this fund up at least until you have 6 months of living expenses. You never know when you might need it.

Major Adjustments During a Relationship Transition

Any breakup or divorce comes with a lengthy adjustment period. After potentially years of living with a partner, your whole lifestyle could change. In fact, you’ll most likely have to cut out some of your usual expenses. Here are some changes you might have to make:

• Bills: If you’ll be living alone, you won’t be able to split bills anymore. More discretionary spending money will have to go towards this.
• Housing: Similarly, splitting rent/mortgage money with a partner may have been a major help. Depending on your budget, you might need a smaller home.
• Food: Cooking from scratch at home can save you a lot of money. Bulk-buying and store loyalty schemes also help you take advantage of discounts.
• Childcare: If you have custody of your child, you could be responsible for all childcare expenses. Consider seeking child support if it fits your situation.
• Wi-Fi: Shop around for new deals that better suit your new budget. You’ll likely use less bandwidth, letting you find a much cheaper option.
• Health insurance: You may have been on your partner’s family insurance plan. If this is at an end, you’ll need to search for your own affordable insurance.
• Boundaries: As your goal is independence, try not to seek aid from your ex-partner. You should also prioritize your financial goals, even if it means saying no to others.

Navigating Joint Debts After Divorce

Do you have any joint debts with your ex-partner? If so, you’ll need to clarify these obligations. If they don’t pay their fair share, even after a divorce, you could be in trouble, too. It’s worth talking to the lender and explaining your situation; they might let you restructure the debt.

Looking more broadly at joint finances, you must also close any joint bank accounts. Depending on the divorce’s terms, you might have already split the money that was in it. Even if the divorce was on good terms, you still shouldn’t keep adding to this account.

In community property states, even debt in one person’s name can go to their ex-spouse. This is only the case if the debt began in the marriage.

Changing Your Legal Documents

Once you know a divorce is definitely happening, change your will. It should always reflect your life’s big changes. Even leaving it until after the divorce is finalized may pose a problem. Should something happen to you, your ex-spouse could get everything.

Similarly, you might need to rewrite your power of attorney. Your current financial PoA might give your (now ex) spouse full control over your finances. Though your loved ones would be able to overturn this if necessary, it’d add unnecessary (and time-consuming) complications.

A lawyer’s help redrafting these can cost up to hundreds of dollars per document. Use an online template instead. These come with every relevant field and section – and they’re typically free or low-cost.

How Your State Affects Asset Distribution

Where you live massively affects what happens to your assets after a divorce. There are two main options here, namely:

• Equitable distribution (41 states), which splits a marriage’s assets fairly but not always equally.
• Community property (9 states), which sticks to 50/50 distribution, with some leeway in certain situations.

Some states, such as Florida, follow equitable distribution by default but offer a choice between the two. Make sure you know which rule your divorce will follow. You’ll then have a better idea of what your finances will look like after the fact.

Final Thoughts

Any serious relationship breakdown can bring a lot of financial anxiety. However, with thorough planning, you’ll know how to keep costs down and avoid major liabilities. As an extra precaution, use online templates to replace legal documents that give them control over your assets.