So you're divorced (or separated). Now what?
When I was freshly separated, life was daunting. Getting through everyday, keeping my kids alive, putting food on the table, and getting to bedtime was just about all I could handle. I was in pure survival mode. As much as you felt like your world was falling apart, as a single mom, I had no choice but to get back up and keep going – my kids depended on me.
For awhile, I had no room in my head to process anything other than how to piece my life back together. Eventually, I got a hang of the day-to-day, but going from married to single, you’ll realize there were a lot of entanglements in your life – children, and also the financial and legal stuff. Joint credit cards, assets, insurance beneficiaries are just a few of the issues we needed to sort out. It’s important to start tackling these matters when you have the mental capacity to do so, because if left untouched, it could lead to unwanted consequences.
Here are some possible scenarios if we don’t update our finance and legal information:
- Joint credit card: Your ex-spouse puts charges on the card, and fails to pay their part of the bill. You’re charged interest by the bank and it negatively affects your credit score.
- Insurance beneficiaries: If the unthinkable happens and you pass away without updating your beneficiaries, insurance payouts will go to your ex-spouse.
- Jointly owned property: If you both can’t agree to how to settle on the property, your ex-spouse could force a sale of the home through the legal system (or vice versa).
In order to start rebuilding a secure and healthy foundation in your new life, here are some of the key financial and legal matters you should review and update for single parents in Canada.
1. Be kind to yourself
First of all, let’s acknowledge that separation and divorce are really hard. You’re going through one of the most stressful events people can experience in their lives.
- Give yourself compassion: Treat yourself with compassion and grace during this time. Healing and rebuilding is a journey, and it’s okay to not have everything figured out immediately. There are days when you feel great and tackle five things off this list. And there are days when you feel so overwhelmed that you just want to sit down, toss your worries out the window and drown in your favourite Netflix show. That’s okay too.”
- Take it one step at a time: Don’t feel like you need to nail all of these in a month. It took me more than a year to learn and figure this stuff out. Heck, I’m still working on a couple of them as I’m writing this. Prioritize what’s most urgent, such as securing housing or addressing immediate financial needs, and tackle others as your capacity allows.
- Seek support: Whether it’s through therapy, single mom support groups, or trusted friends and family, sharing your struggles and feelings can help us feel supported and heard. Mental health is important – we can’t fully show up for our kids if we’re struggling. Don’t be afraid to ask for help either – if possible, ask a family member to babysit so you can get a few hours to yourself.
2. Establish a budget and start saving
This was a really important step that turned my life around as I started rebuilding my new financial journey post-separation. Prior to my separation and divorce, I didn’t pay much attention to our household budget, how much we were spending, or whether we were saving enough for retirement.
Now that it’s just myself and the kids, I needed to make sure we would be financially okay. Housing situations often change with separation and divorce, and your fixed costs such as mortgage/rent, utility bills, etc. will change. Was I budgeting enough for these, on top of groceries, car payments, and insurance? Do I need to cut back on other spending? What about keeping up with kids’ extracurricular activities?
I took a hard look at my finances, and started making smart changes to my budgeting and saving. It enabled me to control my expenses and save regularly for retirement and the kids’ education. Most importantly, after having control of my finances, I didn’t have to worry whether we would run out of money – I was confident that we would be financially okay.
- Open your own bank account: If you don’t already have one, open your own chequing and high interest savings account. You’ll need access to your own money to establish financial independence. Transfer or close joint bank accounts that you’ll no longer need.
- Review your expenses: This may seem overkill to some, but I found this exercise really helpful: I started tracking every income/expense over a month to understand where money was coming from and going to. Whether it was my paycheque, CCB (Canada Child Benefit), strata fee, mobile phone plan, Starbucks coffee, clothes for the kids… I tracked everything. You can do this for a month or two and it’ll give you a general idea. This was incredibly eye-opening for me because it helped me see where I needed to make changes (less takeout and clothes, more saving). There are many budget plan templates out there, I found this free one from Tiller and adapted it to my own needs (and am still using it!).
- Start shaping your budget: It’s generally recommended by financial experts to follow the 50/30/20 budget rule:
- 50% Needs: Mortgage/rent, taxes, utilities, car payments, daycare, groceries, insurance
- 30% Wants: Shopping, concerts, hobbies, travel, dining out
- 20% Savings: Emergency fund, TFSA/RRSP contributions for retirement, FHSA if you’re trying to save for a downpayment, RESP contributions for your child’s education
- Cut unnecessary costs: As a single parent, you’re carrying an extra load on just one paycheque. You may or may not be receiving child support and/or alimony payments. Look into the monthly expenses you’ve tracked and see where you can cut or lower non-essential expenses. For me, some of these were:
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- Subscriptions I barely used
- Eating out/takeout – This saved us so much money – eating out costs sooo much more than cooking at home! I decided to stick to a rule of always having home-cooked meals and only limit eating out to if we meet up with friends a few times a month. I try to pack our own snacks and sandwiches if I took the kids out somewhere for the day.
- Extra toys aside from birthdays/holidays – I used to not think twice before giving in to buying the kids random stuff that they asked for when we went out. It adds up, and they already have more than enough to play with at home. I stopped purchasing stuff we didn’t plan for when we went out, and the kids learned to be ok with just window shopping and (hopefully) not grow up with consumerism.
- Internet plan – I realized I didn’t need the expensive fibre optic internet plan we had from before. I called our internet provider and changed our plan to lower my internet bill by 30% a month.
- Cleaning service – We used to have a cleaning lady who came every other week and deep cleaned the home. It was nice having this as a luxury, but my financial situation changed. I cut back the cleaning service to every 3 weeks, and eventually cut it altogether and managed it on my own. I get the kids to help too!
- Stuff – I’ll admit, I love shopping. If I see my favourite brands on sale, I’m tempted to browse and click buy. Most of the time I don’t really NEED all that stuff. I started to leave items in the shopping cart and sleep on it. Most of the time, I didn’t want the items that much after a day or two – this strategy helped me massively cut back on spending.
- Build an emergency fund: If you don’t already have one, start putting money towards this every month. As a single parent, I’d recommend having at least 6 months’ worth of expenses as a safety net – life happens and you never know what’s next. Vehicle repairs, job loss, a broken hot water tank. I lost my job more than once after becoming a single parent – and was fortunate to not have to rack up credit card debt or dip into my retirement savings, thanks to carefully controlling my spending and having the fund as a cushion.
- Automate savings: Once you have an emergency fund saved, set up recurring payments to your high-interest savings and/or other savings accounts (TFSA, RRSP, FHSA, RESP). Even if you can only manage a couple hundred a month, it’s crucial to start saving as early as possible. The power of compounding will help your money grow over time, but the key is time – start as early as possible and get used to putting away at least 20% of your after-tax income every month into savings.
3. Separate joint finances and assets
Most married couples have a lot of joint and intertwined finances. Navigating how to separate all this can seem like a massive headache (and it was). Take it one-step at a time, and celebrate small wins along the way as you tackle each one – you’re on your way to blissful, financial independence.
- Remove secondary credit card users: If your ex-partner is a secondary cardholder on a joint credit card, you’ll want to look into removing them. If they don’t pay you their portion of the balance every month, you’re still responsible for the bill. Their spending will be reflected on your credit score report as well. You can choose to cancel the joint credit card if it no longer serves your needs and charges an annual fee, but there’ll be a temporary affect to your credit score. (I did cancel ours, as I wanted a complete fresh start to everything. My credit score is still in good standing, I make all my credit card and financing payments on time)
- Address joint debts: Collaborate with your ex to determine responsibility for shared debts like loans or mortgages. You may need to consult a mediator or financial advisor if it’s not easy to agree on things.
- Evaluate how to split assets: This was one of the tougher things to tackle. Couples often jointly own significant assets like a home or vehicles, and there are often strong emotional ties to a family home. It’s best if you can both agree on how to fairly split them – sell, or buy out either one of your share on the asset.
I loved the home we bought together, and the kids and I were still living there for some time after the separation. I was almost in denial when faced with the reality of having to possibly sell it – it’s where my kids grew up, it was our safe space, it was also where I learned to be a single mom. I wanted to buy my ex out to keep it, but an assessment of my finances told me I couldn’t afford it – the mortgage payment and property taxes would
be too much for me to carry alone. As hard as it was, we sold the home in the end. I learned that it was just a physical place – and that no matter where my kids and I lived, we would make a new home together and start afresh.
4. Update legal documents and accounts
If you go through a separation or divorce in Canada, updating legal and financial documents is crucial to reflect new information on how insurance benefits, government subsidies, etc., will be affected.
- Insurance and investment account beneficiaries: Update beneficiaries on life insurance policies, RRSPs, TFSAs, and other accounts.
- Wills and power of attorney: Revise these documents to align with your new circumstances.
- CRA child custody & marital status: It’s also important to update your new custody arrangement as soon as possible with the Canada Revenue Agency (CRA) for tax and benefit adjustments. If you have your child more than 60% of the time, or full custody of your child, you’re entitled to receiving the full CCB amount.
- Employer health benefits: Update emergency contact and benefits information with your employer.
- Utilities and subscriptions: Transfer or cancel shared utility accounts, mobile phone plans, and subscriptions to avoid any service disruptions.
- Secure your accounts: Change passwords for online banking, social media, and other critical accounts to ensure privacy and safety.
Starting over after separation and divorce was one of the hardest things I ever went through, but it enabled me to experience tremendous personal growth, build strength, and resilience. Rebuilding financial and other essential structures in my life was one of the first steps I took in embarking on my new chapter in single parenthood, independence, and new-found happiness. Remember, you don’t have to do it all at once – you can also achieve financial independence and wellness, one step at a time.