Pattie Lovett-Reid: Financial tips for the newly-single
When two in a household become one, financial circumstances change drastically. Suddenly, you become chief financial officer of your own life. That can leave you overwhelmed and frustrated.
What happens next is up to you, since how you tackle a break-up, divorce or separation will depend on your particular situation. Here are other considerations to make as you work toward achieving financial independence:
1. Become your own CFO
Nobody cares more about your financial well-being than you do, so don’t abdicate financial responsibility to anyone. Take charge now.
2. Set goals
Set realistic financial goals for the short-, medium- and long-term. Be personally accountable for reaching them.
3. Avoid these common mistakes
• Throwing caution to the wind when it comes to spending, saving or investing. Know your numbers.
• Being too hard on yourself. Short-term goals do matter. Especially after a sudden split from your partner, it is okay to cut yourself some slack.
• Under-estimating the power of compounding. When you owe money, it can destroy your plan. When you invest, it can grow your plan.
• Not knowing where you are going. Develop a plan now — one that excites you and keeps you motivated and moving forward.
• Not asking for help. Savvy people ask questions and seek out resources.
• Procrastinating. Being paralyzed with fear will not help you get to a better place financially.
4. Learn more, earn more
• Upgrade your financial literacy and skills.
• Seek advice from professionals — financial advisor, lawyer, accountant, etc. — you trust.
5. Be disciplined
• Pay yourself first!
• Think hard about your wants versus your needs.
• Work with a financial advisor to discover your true risk tolerance and implement an appropriate long-term portfolio strategy.
• Stick to your plan and don’t be tempted to go off-track by short-term market movements.
6. Go beyond
• “Buy and hold” to defer taxes.
• Maximize your RRSP and TFSA contributions.
• Remember that dividends are your secret weapon.
• Maximize tax deductions.
• Maximize employee benefits. Ensure you have the right coverage for your new situation.
• Employ yourself, part- or full-time.
• Don’t forget about short- and long-term disability insurance, critical illness insurance and employee life insurance plans.
• Take a long-term approach to saving and investing.
• Set up a pre-authorized purchase plan.
• Set aside enough money to cover living expenses for six to nine months, for contingencies.
Tick the boxes as you go. Soon enough, you will build financial momentum.
February is Your Money Month at BNN Bloomberg. For more content like this, visit BNNBloomberg.ca/personal-finance