The majority of married or common-law Canadians have shared assets, finds TD Canada Trust.
Of those, 72% own a home together, 68% have a joint bank account, 64% have a joint financial plan and 52% have a joint credit card.
But how do you regain financial stability if you break up?
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Divorce proceedings are taking longer, with 21% lasting more than two years—an increase of 6% in the past five years, says TD. This makes it even more challenging.
“Many people aren’t prepared for the costs associated with divorce and how their lifestyles may change afterwards,” says John Tracy, senior vice president, TD Canada Trust.
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Here are four tips to help your newly single clients re-establish their financial independence.
1. Get started. Understand your current position. You and your partner may have joint assets and liabilities. You’ll need to work out the division of the assets and find out what liabilities you’ll be responsible for.
2. Re-evaluate goals. If your partner was the one who was making most money-related decisions, it’s time to take the reins on money management and adjust your investments accordingly. An advisor can help you create a financial plan, which allows you to achieve your short-and long-term goals.
3. Focus on building wealth. Moving from a saving to an investing mindset is effective. Look for investments that offer a low minimum investment. Everyone has a different risk profile, though, so make sure you have the right mix. Set up a pre-authorized transfer that automatically transfers a set amount at regular intervals throughout the year into your RSP. These contributions also let you benefit from dollar-cost averaging.
4. Track progress. Create a budget and stick to it. Review your plan regularly to ensure it continues to evolve as your needs and lifestyle change.
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