For many people going through a divorce, the question of the financial settlement is understandably a key concern.
While the initial reaction to hearing that your partner intends to separate may lead to feelings of upset, confusion and anger, once the emotional shock has subsided and the dust settles, the practicalities of figuring out one’s new financial reality often take centre stage.
Financial settlements usually involve reaching an agreement on a range of different assets to create a split that meets both you and your ex-partner’s needs and makes financial sense.
For their part, the courts do not seek to apportion blame to either side when determining what constitutes a ‘fair’ division of finances. Rather, it is the needs of each party that are considered, to ensure that both parties can survive financially after the divorce is finalised.
However, with proper financial planning it is possible not just to survive, but also to thrive financially and emotionally following a divorce by laying early foundations for future financial wellbeing.
Financial considerations are a major driving force behind a person’s overall wellbeing and have a big influence on their mental health. Like physical health and mental wellbeing, you can take positive steps to improve your financial wellbeing, allowing you to enjoy life to the fullest, both now and in the future.
A financial wellbeing approach helps people to unlock the potential for their wealth to enable a different, better and more fulfilling life, both now and in the future. Using a financial wellbeing approach, the financial planner’s job is to help the client to appropriately use their wealth to lead happier, healthier and more fulfilling lives.
Rather than simply working to maximise returns in the distant future (locking up capital for years in the process), financial wellbeing starts with a thorough appraisal of your needs in the short, medium and long term. The goal is to ensure your assets meet your requirements, so far as is possible, or that they are put to work appropriately to achieve a particular goal.
Divorce provides a chance to re-appraise how you want to live your life, so it is essential to consider how your assets can benefit your life and wellbeing, and how you can use your wealth to achieve your life goals. Involving a financial planner early in the divorce means they can help you determine your requirements and identify your life goals, which can then help to shape the divorce settlement and take control of your financial future.
Whatever your goals or ambitions, one of the most important things you can do in order to make them a reality is to create a plan. Financial wellbeing is about having a feeling of control over your finances, to give you confidence in the financial decisions you make and a sense of security in the face of difficult or unpredictable circumstances. It is essentially about helping you to realise and understand your own motivations and ambitions and really getting to the bottom of what you would like to get out of life.
In practical terms, after a divorce this may include deciding what accommodation you can afford, re-appraising when you will be able to afford to retire, or considerations around the needs of children as they get older (such as help with university fees or a deposit for a property.)
It may include what to do with a lump sum, such as what proportion to invest (and where) and how much will be required for living and day-to-day expenses, whether to launch or invest in a business, or what to do with a pension entitlement. You may have unfulfilled ambitions, such as to work in a different sector or to travel, which can also be factored into your plan.
Good financial planning will provide valuable information and a comprehensive overview of the options open to you during these challenging times, helping you to set goals for the future and make clear, financially resilient plans to help you weather life’s big events.
There’s no ‘one size fits all’ approach to securing your financial future, and how you approach planning will be determined by the assets you have available and your immediate and long-term goals. Our four-step programme – the AiMS Discovery Journey – has been developed in line with guidance from the Initiative for Financial Wellbeing.
Our approach aims to empower our clients, helping them to achieve greater financial freedom, purpose and resilience, which in turn will support their immediate needs while growing their opportunities in the future. Contact us today to start your discovery journey.