Averting Financial Tragedy In Marriage Breakdowns

We've all heard stories of how divorces, settlements, alimony payments, child support payments , and second marriages have made a severe dent in the wallet.

When a marriage breaks down, as sad as it is emotionally, it can also financially take a toll on its most innocent victims - your kids, or you if you're still young and haven't got much to fall back on.

Divorce or loss of a spouse from death leads to loss of income. Most homes today are run on dual income. With divorce or death, it causes the cash flow to split and the savings are the first sacrifice. In addition, if you pile on the burdens of alimony and child support payments, one parent or spouse can really feel the financial burden weighing heavily. Before this tragedy knocks the wind out of you, let's take a look at how you can lighten the load.

Firstly, Life Insurance is one of your biggest protectors against tragedy. If the earning spouse dies an untimely death, their Life Insurance will aid the finances of their beloved family. Ideally, one should insure their lives for up to seven times their income. When taking into account inflation and growing needs, you will see how quickly the numbers add up.

There are many other ways to avert financial tragedy. Keep saving and keep that in an airtight account, preferably a scheme that allows you to only withdraw money every ten years or so and even then, just keep renewing it.

Create a second source of income. If you're unable to make money through the usual job you have, for any reason, such as illness or economic recession, do try and divert your talents and abilities to another field. There is no income like running income, no matter how little it may seem.

Tips for Single Parents

1) Redesign your plans

As a single parent, you're paying for everything. Alone. So redesign your goals into achievable realities. Scale down if you have to and where you need to, so you don't burden yourself or your children with unnecessary debt. Figure out what goals are affordable and which are too luxurious to uphold given your situation.

2) Prioritize

As a parent, you may want to give your child everything they want. But figure out which you need the most and which you can push to a later date. It is a tough job, but it will teach you and your child discipline and some life lessons. Not to mention, you'll be saving a little too.

3) Safety Net

Especially when you're not part of a dual income family, you'll have to literally shoulder the burdens of emergencies and medical expenses for your child by yourself. As a rule of thumb, save enough to always have 6-9 months of living expenses in case you're out of a job or ill.

4) Insurance

Don't scrimp on this one. Make sure you have critical illness cover, long term disability insurance and sufficient medical cover for you and your child. If anything were to happen to you, your child will be helpless without any other parent to fall back on.

5) Will

Create a will, so that if anything happens to you suddenly, there's someone you trust who will execute the will in favor of your child only, especially if he or she is a minor when you die.

6) Talk To Your Child

Teach your child the value of money, spending wisely and saving regularly. Educating them at a younger age to be self-sufficient and financially independent allows you to worry less about denying them certain luxuries and of their future.

7) Health is Wealth

Never forget that if you don't take good care of yourself, there will be no other partner who will step in for you and properly look after your kid. You're it. Treat yourself well and don't skimp out on necessary medical checkups to ensure you're around for a long time, and productively so.

Tips In Case Of A Divorce

1) Lawyer Up!

Get a good matrimonial lawyer, so you know your financial rights. If you cannot afford one, find out which pro bono organisation can help you with one.

2) What You're Worth

The court will require a detailed list of assets you share with your spouse. Make a detailed list, figure out what you're both worth, so that you know how much you can ask for and/or how much you can give as well as how it can be fairly divided.

3) Budget

After a divorce, you will suddenly be a single-income family. Depending on your needs, lifestyle, and a reality check, you will have to recreate a budget for the new you.

4) Insurance

After a divorce, your various insurance might have all been linked with your ex-partner's insurance, business, or office cover. Now you will need provide yourself with all of those, in sufficient amounts in case of any unpredictable life events. Review and revamp according to your lifestyle,

5) Consult a financial advisor

They have several other tips and tricks they can show you to enhance and stretch your income. Don't assume that you know everything about the financial world. Refrain from taking advice from a 'divorced friend' unless they are also a financial advisor!

Takeaway

Given how unpredictable life can be with regards to marriage, we need an extra dimension of financial planning - not one that fits into a regular life plan, but more of an emergency plan. With these tips, you can be more prepared for when life takes its unexpected course yet again.