Financial planning after a breakup

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    by Jenny Smedra

    Financial planning after a breakup

    No matter how long you spend with someone, breakups are difficult. We had spent nine years living and building a life together. Then suddenly the future that I had been working towards for almost a decade dissolved. Instead of planning a wedding, I now deconstructed a life that would never exist. While there are many of the same emotional parallels with divorce when unmarried couples split up, an entirely different financial situation emerged. While some days it was painful and almost impossible, my loved ones told me to look to my future. So I took her advice literally. I started imagining what could be and used financial planning after a breakup to move on.

    Allocation of finances

    You’d think our breakup would be easier than a divorce as there was no paperwork. In some ways, however, it was even more difficult to navigate without a legal timetable. Although we weren’t legally bound to each other, it was much more complicated than saying goodbye and giving each other’s things back. We’d traveled the world, supporting each other through career changes, and building significant assets and liabilities over time.

    Fortunately, things ended amicably and we worked it through like mature adults. The most practical first step was to untangle our finances. We had always kept separate bank accounts, so it was just a matter of paying the outstanding debt and removing information from the accounts. First, we added up all the bills, including rent, utilities, and credit cards. We then split the cost down the middle. After we paid the balance I put everything on his name as he would be the one who would stay.

    Unfortunately, our split came before the end of our rental agreement and my flight home. Although a bit awkward, we decided that financially it makes the most sense to share the apartment by then. We would avoid the cost of the penalty for breaking the contract and finding short term accommodations. In return for two months’ rent, it seemed fair for him to keep the large pieces of furniture and electronics we bought together.

    With the biggest questions answered, it got surprisingly easy when we hit the line items. The decision to leave everything behind meant that there wasn’t much left to choose. He returned the shared credit card to me and deleted my personal information from any shared streaming accounts or apps. With just a few clicks of the mouse, any remaining connection we had was gone.

    Financial planning after a breakup

    Now that I’ve flown alone, my view of the world has changed a lot. I no longer planned for “we” since it was just me now. It took me a few months to adapt and learn the habits I had established in managing money for two. Now I lived on a single income that was half the income but only half the expenses. It also gave me the opportunity to analyze my spending habits and re-prioritize my financial goals.

    budgeting

    The next step in financial planning after a breakup was to create a new monthly budget based on my lifestyle changes. This transformation also brought with it a new career path and a new place of residence. When I started building my new business from scratch, I agreed to stay with my parents to help my family take care of children and the elderly. It turned out to be a good financial solution. Not only did it give me a step up as I struggled to establish myself, it also gave them much-needed relief.

    to pay off a debt

    When I looked at my monthly expenses, I found that I had to spend very little beyond basic necessities. I’ve lived on barebones budgets for years and the pandemic made it even easier Not go out and spend money. Since I also saved more by sharing the cost of living, I had the opportunity to focus on paying off my debts. Even with a meager monthly income, I was able to pay off all of my debts in six months! That was a big milestone in my financial planning after a breakup.

    Retirement planning

    One of the most important things I did for my future was to face my financial fears directly. After years of avoiding it, I finally got serious about retirement planning. Even though we’d spent nearly a decade together, my ex and I never had a clear financial plan for the future. In retrospect, this should have been a red flag. Part of its charm, however, was the ability to live in the moment. Now I knew it was time to look ahead.

    While my parents taught me how to save and avoid large loans, I never learned much about investing. In all honesty, every topic related to investing and finance in general has intimidated me. But I knew I had to lay the groundwork and start saving for retirement.

    As with all of my problems, I started reading when I didn’t know the answers. Thanks to Morningstar’s free resources, I trained myself in the basics and found a broker to manage my accounts. With the help of my financial advisor, I now have a diverse portfolio including IRAs, mutual funds, and bonds.

    Prepare for financial freedom

    Looking back over the past year, there have been many personal, professional and financial changes in my life. However, it has also fueled immense growth. By focusing on financial planning after a breakup, I was able to turn one of the toughest times of my life into one that led to self-improvement. While it’s easy to kick myself for my mistakes and stupid decisions, I’m already in a better place than me.

    The breakup made me look closely at my life and find out what I wanted to achieve with it. By focusing on improving my financial health, I took on the challenge and built something all of my own. It also encouraged me to try harder to see how far my ambition can take me. Part of regaining my identity was taking risks and no longer holding back out of fear. With every new success and financial milestone, I gain a little more self-confidence and come one step closer to the future I want.

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