In brief: money after divorce – your fresh start

Kate Daly 0:00 What does rebuilding your finances look like once a divorce is finalised? Molly Haylett 0:05 It's really different for lots of people. You know, there's never a one size fits all, but I'll there's some things that I see typically at the beginning that I think are really, really important. And first one is that it's going to feel different, you know, and it will be different. So being able to find again that that new sense of clarity at the end of the process is so important. Kate Daly 0:27 Welcome to The Divorce Podcast, where we explore relationship separation and parenting apart. If your relationship has ended or someone close to you is going through it, this podcast is for you. I'm Kate Daly, the relationship counsellor, divorce expert, and co-founder of amicable, a legal service helping couples navigate relationship change. Each episode looks at separation from a different angle, emotional, legal, or social, and with experts and special guests who share their own stories and tips to help people separate in a kinder, better way. This week I'm delighted to be joined by Molly Haylett, Chartered Financial Planner at Octopus Money, for the third and final part of our series on financial planning through divorce. This time we're focusing on what comes after your divorce is finalized. So how to reset your finances and plan for your new financial reality and future. If you haven't already listened to part one and part two, catch up for some tips on getting ahead at the start of the process in part one and in part two on money decisions and how you navigate during a divorce. This episode and our mini-series with Molly is created in partnership with Octopus Money. We discuss general information only and it doesn't constitute regulated financial advice. The tips we discuss are not personalized recommendations. So please do get in touch with an authorized advisor who knows your personal situation before making any financial decisions. Welcome back, Molly. Thank you for having me again. It's lovely to see you again. So this is part three, our final let's stare down the barrel of our new financial reality. So the divorce is done, finances are settled. What does rebuilding your finances look like once a divorce is finalized? Molly Haylett 2:28 Yeah, with this one in particular, you know, it actually is really different for lots of people. You know, there's never a one size fits all, but I'll there's there's some things that I see typically at the beginning that I think are really, really important. And the first one is that it's going to feel different, you know, and it will be different. So being able to find again that that new sense of clarity at the end of the process is so important. Something that's really important, which you might laugh at me for saying, but is is implement uh what's come up from the divorce. So it has, you know, I'm sure you've seen it, I've seen it, but lots of time has lapsed, and people say, Oh, I really need to do that. So with things like pension sharing orders, you get a deadline, which really helps. But um, make sure that you're implementing, you know, doing your paperworks and ticking that off and getting that done. Again, if like pension sharing orders, sometimes you'll have to leave the scheme, or sometimes you'll choose to leave the scheme for lots of reasons. So making sure you've got a receiving scheme set up, you know, and everything else. So actually implementing a step one. Kate Daly 3:25 Well, it's a good point you make because I know from my own experience, once you get to the end of it, it's been such a flipping marathon that by that point you are just exhausted. You literally want to line a dark room with a towel over your head and never look at a, you know, an email from somebody official again. So you kind of are at the point where you are exhausted and knackered, but actually, you're right, you have to maintain some momentum and you have to see that the end of the divorce is kind of like the midpoint of it all. And you really have to reconfigure that in your head so that you keep a little bit of energy and stamina back to make sure you have done all those things. And like you say, there's a whole bunch of financial things you need to do implementing the order being the first one. I'm sure we'll come on to some others. Molly Haylett 4:10 Yeah, there's um something that that comes into my mind when I talk to you about this, is like when you have a baby and you have the baby, they say the first three months is like the fourth trimester, and it's a bit like that. Like the after it's all done and you can sort of breathe and tick, you know, everything's done and you can settle after everything that that you've gone through for such a long period of time. I say to people, it's not about right, you know, everything just going to automatically take off and reset. It's actually just about finding solid ground and kind of settling into what it's like to have maybe look at a single income and run a house on a single income, and because that will be very different. So the first year is there's I would say there's no rush to sudden once everything's implemented, you know, you've met those deadlines and you can put that to one side and breathe. It's just about finding solid ground. And there's lots of brilliant planning you can do, but that can come over time as well. But the the kind some easy places that I would start when that timing does feel right is um having an idea of what you need is again really, really helpful. So actually, what what do you want to do, you know, and when would you like to maybe wind down work or something like that? What do you want to do? And then having an idea of where you are at the moment now that your assets might look slightly different as well, and how does that feed into the bigger picture? And one of the easiest things to do is just look at what you've got now and leverage what you've got now. So no new steps, nothing else that you need to do, but actually understanding how's my pension invested and is that going to get me where I want to be? If you're employed, are you leveraging things like uh employer matching into your pensions and salary sacrifice and just making good decisions with what you've got at the moment before you think about anything else? But outside of that, it's also just about protecting your yourself now. So trying to replenish some like emergency funds as and when possible as well. So even if it's you know £10 a month into emergency fund, it's it's all relative, depending on kind of where you come from. Kate Daly 6:10 Well, that's a really good point, isn't it? Because I think most people get to the end of a divorce and literally you're in survival mode. You know, it's very expensive. You've hemorrhaged money on professionals potentially. You now live as a single income household, potentially. Everything feels more expensive. You've got to pay every time if you've got kids, you've got to pay every time you step out the door if they're with you. So you can't just go for a run, you can't just go for a night out to get your relief because that requires a babysitter, and that's a cost you've never had to have before, you've never had to think about it in that way. Everything starts to change. It might be that you rent your renting rather than buying because your partner and the kids are staying in a house, and all of a sudden you've got the expense of rent and the feeling, the feeling that it's not your own place and it might not be big enough to have the kids around. So you you've got all of that re-emotional regrouping to do, as well as working out how much it costs you to live like this, like you say. But I think the your point there about making goals like replenishment, even if it's a small amount, that is a habit that you're forming. And it's very easy, you know, if you do get a little bit more comfortable, or you know, you do get a pay rise or whatever it is, to then use that additional money to top up that fund so you're never missing it. But it's those small steps of thinking about this in a replenishment way, uh, I think that really help. Molly Haylett 7:40 Yeah, definitely. And it's also sort of there's lots of things that are, I would say, come right early on in that list, way before, right? How do I plan and prepare for the future? Which is why I say leverage what you've got, look at cash, you know, and how to gradually replenish um your cash position so that you've got money there for emergencies and safety nets and everything else. But also there's the the admin bit. So wills, lasting powers of the turning, all of that, that stuff really important, protection, but also uh on your pensions. Um, again, lots of people won't know that they don't necessarily follow a will, so they're governed slightly different. So you'll have something called a nomination of beneficiaries form or an expression of wish or something like that, the pension, which is where you outline your wishes and where you would want that money to go if you were to pass away. And that's something that at the end of the process that you've just been through is really worthwhile checking in and making sure, right, does this reflect my wishes today and not my wishes five, 10, 15 years ago when I last did it? So also ticking off that those admin bits and just making sure that your wishes are all up to date. Yeah. And then other than that, I would say it's just about it's about getting grounded, getting familiar with new cash flow, new expenses, and what that all looks like. And then oh, just gradually the habit like the habit of saving, which is so difficult. And people, this is what I hear an awful lot. It's well, it sounds great that you know, I'd love to build an emergency fund, but I can't build an emergency fund because I don't have the money that's left. And the word you said, Kate, was exactly it, it's the habit, be it five quid a month. The habit of starting to put money to one side will really quickly start to compound, and that is more important than I'd say the amount itself. Kate Daly 9:20 Yeah, exactly. And I think that you know there are some other tricks and tips if you're not huge, we're not talking about being super wealthy here to do some financial planning. The whole point about octopus money is it it's not a traditional IFA where you need squillions of pounds to be investing before they'll even talk to you. You're about helping normal everyday people to re-acclimatize at the end of a divorce and think about what is affordable to them and to coach them through that, aren't you? So that's the that's the key thing. And it might be something as simple as just working out whether now you're entitled to single person discounts. So you can, for council tax, for example, you get 25% discount. Well, you know, that can make the difference between surviving and thriving, can't it? Just, you know, and maybe some of that saving, if you haven't had it right from day one, maybe that's where you create a little bit of emergency saving pot and that kind of stuff. But I think I hope from listening to all three parts, people will have been thinking about uh when they're doing the split and they're looking at their income and their outgoings, you know, making sure they've built in some affordability for contributing to a pension and that kind of stuff. So they've looked at their net income rather than their gross income and they've taken out the salary sacrifice if you have with your additional pension contributions and that kind of thing. So as I say, go back and listen to those tips and tricks because you could be in a better position by the time you're at stage three if you've negotiated with some of those tips in mind. But what do you think people can realistically be expected to do in that year after a divorce is finalised? Molly Haylett 10:59 I I think it is just going back and doing the simple stuff first, implementing what you need to do, checking your wishes, because that is really important, and making sure that that's up to date. If something happened to you, you know, are your kids looked after and everything else in terms of where do you want the money to go? You'd have received and potentially a new pension or lost a portion of your pension. So again, just reassessing. But more than anything, it's just familiarising what's cash flow like, what's coming in, what's going out. Is there anything left at the end of the month? Exactly like you said as well, allowances. Um, lots of couples maybe won't claim something like child benefit if one of them is a higher earner. But actually, that might that picture might be slightly different after. So just going back and looking at what you're entitled to, you know, speaking to people, be it a professional or just a trusted friend, or using, you know, there's lots of free resources online as well, but asking for help, you know, as much as possible because there is lots of help out there, but also that just giving yourself grace that you know it's about grounding, finding solid ground, really familiarizing. And there are lots of really, really great things that you can do to look to your retirement and your future and all of that. Lots of the tools are already there for you. It's just about timing. Kate Daly 12:12 And I guess credit is the other thing, isn't it, as well. If you've been in a marriage where you haven't really paid any attention because one of you's had a good credit rating or credits run through them, building up your credit rating as an individual that can be important, can't it? Because that can access money that you know you wouldn't otherwise have. It can access better credit cards, that kind of thing to help you manage your cash flow. So all of that stuff becomes incredibly important again, doesn't it? So seeing yourself as a financial individual in their own right, and maybe that's something you haven't tried on for years. Do you know what I mean? It I can certainly remember that, even though I wasn't married that long the second time round. It just I had to, because I had been so focused on the home and the children, I had to get back into all of that and I had to build my confidence and I had to start to think of myself in that way again. And and that again, that psychological switch that you're turning, that's a big part of this, isn't it? A big part of looking to the future. And then you can do all the sexy stuff later on, can't you? Like battling and investing and everything else. But like you say, I think the key message here is there's no rush to go on and do all of that stuff. The point at this stage is to regroup, readjust, take your time, feel what it's like in this new reality and get the housekeeping done. Yeah, exactly that. Fabulous. Molly, it's been an absolute joy talking to you. That's all we've got time for today. Where can people find more information about Octopus Money? Molly Haylett 13:44 Uh online it is the best place to start. So if you just type Octopus Money into Google, we will come up and there'll be lots of information there. And I think maybe there'll be a link listed here somewhere potentially. Kate Daly 13:54 Fabulous. Yes, we'll put all of the details in the show notes. And of course, you can find me on LinkedIn and Instagram and hear about new podcast episodes by subscribing for updates and visiting thedivorsepodcast.com or find us on your favourite listening platform. We'd love to know how we can help further. So please share your questions on divorce separation or co parenting with us. They might just be a topic of a future episode.