Ways to Reorganize Your Finances After a Breakup
Breakups are tough. Not only are you emotionally vulnerable—complete with late night Ben and Jerry’s binges—there’s also the messy task of separating your finances from your ex. There’s a lot to consider when splitting up, and money might be the last or first thing on your mind, depending on your situation.
Your relationship wounds are still fresh, and you may be feeling sensitive about it all. Money can be a delicate subject, but it helps to have a plan to keep you from feeling anxious. Seeking marriage or breakup financial advice can be a brave step.
Here are some tips for handling your finances after the split.
Separate Joint Accounts
Are the words “joint checking” flashing in your eyes? If you share a checking account with your ex, you may be seeking legal counsel for advice. Most may recommend opening a separate checking account first before closing out the joint checking account . If the split is amicable, you both may agree to close the account together.
It’s recommended to check on any auto-payments for various bills and confirm they are canceled or moved over to your new checking account. You may also need to contact your employer with your new account information if you use direct deposit with your paychecks.
If you have any joint credit cards, be sure to address those as well. If you added your partner to your credit card, you may be looking to have them removed from the account as soon as possible. If you are worried about your ex using the card even though they’ve been taken off of the account, one idea is to ask your credit card company to issue a new number and card for you .
It’s also recommended to change the password on any online accounts as well.
Owning up to Your Financial Faults and Strengths
While you were in a relationship, did you take a backseat approach to finances or did you go certified accountant on your ex? When you break up with someone financially, it could give you the opportunity to own up to your faults and strengths.
What are some things you may need to work on with money? Now could be the perfect time to reevaluate your financial life. Realize that procrastination generally doesn’t move someone forward. The same could be said for investing. Start today by taking one single step in the right direction.
On the other hand, you might have a knack for finding the best restaurant deals in town, and know how to spend wisely at the grocery store. One idea is to use that financial strength to your advantage. Being a savvy shopper can work as a springboard to give you the confidence to tackle other financial goals.
Determine Your New Living Expenses
If you and your ex were renting, you’ll need to figure out what to do with the lease. Depending on the terms of your lease, you may be able to transfer the lease to be solely in the name of the person who plans to stay. If you are going to be moving, it’s recommended that you remove your name from any lease and transfer the utilities out of your name.
If you own a home together, you may also have to make some tough decisions on who will stay and who will get what. Consider involving legal counsel when needed.
As part of the breakup, you may be reviewing your living expenses to come up with a new budget now that you won’t be splitting things like rent, food, and other necessities with another person. It’s usually helpful to take a look back at past spending habits to see how you can prepare for the future.
If you plan to move out, you could estimate any new costs associated with rent or a mortgage payment, utilities, taxes or insurance and add it into your list of expenses. For example, to make this simple on yourself, you could take a piece of paper and write out your monthly income in one column and your expenses in a second column. You can quickly start categorizing which expenses are necessary and which ones can be put on hold while you get things in order.
Divide Your Possessions
The standard rule has been whatever you brought into the relationship is yours to keep after it’s over . Anything the two of you bought while you were together will likely need to be split up. If the relationship is still amicable, you should be able to split things up fairly. If you need assistance from a partial third party, one good idea is to consider hiring a mediator or legal counsel.
Put Freed up Cash to Good Use
While heartbreak is no picnic, it could help to make the most out of freed up cash. Money that was previously spent on date nights, or your significant other’s birthday and holiday gifts can now be considered for goals you could reach independently. One good idea might be to set aside money for things you have had on your want or need list to possibly help get you in a new state of mind.
Another avenue could be to consider taking the extra cash to start investing. Investing doesn’t have to be scary. Throwing yourself into learning about investing could be one way to add to a healthy start for this new chapter in your life. Figuring out your investing goals and independently managing your money may be exactly what you need.
Financial Self Care
Part of going through a breakup is envisioning a life without your ex in it—which can be an emotional roller coaster. Part of moving forward in your life is taking a look at your financial future. How will you spend, save, and invest money on your own?
Managing your finances does not have to be time consuming or difficult. And you don’t need a lot of money to get started. If you are investing in your 20s, investing your money at a younger age could be a beneficial start to your financial self-care routine.
Exploring Ways to Invest by Yourself
Looking to make some financial strides after a breakup? Try taking advantage of different investment options that can be set up independently. One good idea is to Start with your employer. Do they offer a 401(k)? It is broadly recommended to maximize employer contribution matching if that’s something that’s offered.
Next, try taking a look at other outside investment opportunities. One popular option is opening a traditional or Roth IRA. Traditional IRAs operate much like a 401(k); money that’s contributed to this account is tax-deferred. Investors are generally taxed on the money when they start withdrawing from the account. A Roth IRA can be contributed to on a tax-free basis. The money contributed to the account is taxed immediately. Any qualified distribution withdrawn during retirement is done so without additional taxation.
Another great option to consider is a brokerage account. That is, an account that allows investments into choices like stocks, bonds, mutual funds, or any combination of investments. Use these types of accounts could be used to save not only for long-term goals, but for short to mid-term goals like a child’s college education or a home purchase.
There’s Power in a Smart Investor
Getting your finances in order and working towards growing your money is one way to get over a breakup. Getting life moving in a positive direction could be helped by exploring ways to become an informed investor. One avenue could be with SoFi Invest®. It doesn’t take much to get started. With active and automated investing options, you can choose what you feel most comfortable with in regards to risk. SoFi members have the option to start investing with as little as $1 and gain access to complimentary financial planning.
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