Planning Points: What to do if you’re suddenly single

Regardless of how it happens, it can be shocking for anyone to transition to becoming suddenly single. The financial burden is amplified even more if they were not the one responsible for managing the finances.

For many people in this situation, anxiety becomes the prevailing emotion. Not only are they walking through loss and drastic life changes, but they simultaneously face the overwhelming responsibility of making major financial decisions and taking over all aspects of financial management.

A common challenge is to know where to turn for support and guidance on financial matters. Finding a trusted friend or family member to provide a listening ear, and someone to act as a problem-solver, will help alleviate the stress and provide confidence in knowing your finances are on track.

The initial shock

Many of the new clients I meet in these types of situations often feel paralyzed. They know they need to take action on their financial life and start getting things in order, but they don’t know where to start.

Much of that inability to act comes from a fear of making a mistake. They may have relied heavily or entirely on their spouse to handle financial matters, and they worry about how to move forward and don’t feel empowered to make decisions. They are afraid of making a mistake that would cause possible long-term consequences, which can lead to confusion, loss of sleep and indecision.

An adviser or close family friend can make a world of difference during these times.

Working with someone who is looking out for your best interests, both financially and emotionally, is crucial.

It is very important to not feel rushed, but it is important to establish a plan to help navigate the complexities of their new circumstances and relieve some of their anxiety by guiding them through their big financial picture.

Prioritizing the near-term to-do lists along with long-term needs will help alleviate the burden of an overwhelming situation. Just knowing they have a fully committed advocate on their side supporting them in their decisions will help provide the freedom and confidence to get through this trying time.

Near-term

Initially, it is best to identify where your monthly expenses are being paid from and how you will pay for your future needs.

Making sure you have access to a credit card and a bank account is the top priority.

Establish an “incoming” basket of all relevant bills and confirming how they have been paid in the past will help clarify your budget. Check your email for any “paperless” bills and determine how they are being paid.

This also will help you gain control of the monthly expenditures and give you some time to focus on your longer-term needs.

Identify any electronic deposits to your bank account, which can include Social Security, pensions and other sources of investment income. A great source of information to help locate any other investment/bank accounts, etc. is your most recent tax return. This may reflect a paper trail of interest or accounts generating taxable account activity.

Once you are comfortable in knowing the monthly expenses are being paid with a predictable source of income, you can direct your thoughts to a longer-term plan.

Longer term

We have created a binder for clients who need help with organization that includes all relevant financial documents and tabs to file them.

Ideally, this is done before becoming suddenly single, which will lessen the overall burden dramatically.

If that didn’t happen, start now and include:

This is a partial list, but it is a great starting point in becoming organized.

Oftentimes in these scenarios, people will find themselves with a life insurance payment, a divorce settlement, or another type of financial windfall.

Without a strong financial foundation, all this money becomes a burden and a source of stress. No long-term financial decisions need to be made immediately. Take your time.

The goal is to create a plan that helps clarify your priorities, both for the present-day and for the future. By creating a plan and receiving the proper support, education and direction, you may start to live life with confidence and comfort again.

Pete Alepra is a financial adviser at RBC Wealth Management in Cedar Rapids; peter.alepra@rbc.com. The opinions in this article are for general information only and are not intended to provide specific advice or recommendations for any individual.