10 steps to take back control of your finances after a break-up

Experiencing a breakup can be emotionally challenging, and it often forces you to confront significant financial adjustments.

With 60% of people in serious relationships sharing joint bank accounts, the end of a relationship can turn into a financial muddle. However, difficult times also offer an opportunity – a chance to reassess your financial habits, break free from detrimental patterns, and build a solid foundation for your future.

MoneyPlus, a leading money advisory service, has developed a comprehensive guide outlining 10 actionable steps to help you regain control of your finances after a breakup.

1) Conduct a comprehensive financial assessment

Begin by taking a detailed look at your current financial situation. List all your assets – savings, investments, property – and liabilities, including loans and credit card debt. Review your income sources and monthly expenses. This honest assessment provides clarity on your overall financial health and helps pinpoint areas that require immediate attention.

2) Develop a realistic and detailed budget

Crafting a budget tailored to your new circumstances is crucial. Start by:

Categorising expenses: Divide your spending into fixed (for example, rent, utilities) and variable (e.g., groceries, entertainment) categories.
Setting spending limits: Allocate specific amounts to each category based on your income and priorities.
Monitoring regularly: Track your spending meticulously to ensure you stick to your budget, adjusting as needed.

A structured budget not only helps you manage your money effectively but also prevents overspending during transitional periods.

3) Prioritise debt repayment strategically

If you’ve accumulated debt, especially high-interest obligations, it’s essential to address them head-on. Consider the avalanche method – focus on paying off debts with the highest interest rates first while maintaining minimum payments on others. This strategy minimises the total interest paid overtime and accelerates your journey toward becoming financially secure.

4) Reevaluate and reduce recurring expenses

Take a critical look at your monthly recurring expenses:

Cancel unused subscriptions: Eliminate services or subscriptions that are no longer necessary or that you no longer use.
Negotiate bills: Reach out to service providers to negotiate better rates for utilities, insurance, or internet services.
Streamline services: Consider consolidating services to reduce costs.

5) Establish and build an emergency fund

Financial stability is built on preparedness. Aim to save at least three to six months’ worth of living expenses. Set up a dedicated emergency fund and automate regular transfers to ensure consistent contributions.

6) Seek professional financial guidance

A financial advisor can offer personalised advice and strategies tailored to your situation. Consulting a professional helps you:

Develop a bespoke financial plan.
Identify potential pitfalls.
Optimise your financial health during this challenging period.

Expert guidance can be invaluable as you navigate the complexities of rebuilding your finances.

7) Reflect on and reshape your money mindset

A breakup is a time for introspection. Reflect on your past financial behaviours and identify any underlying beliefs that may have contributed to bad money habits. Understanding these patterns can empower you to make healthier decisions moving forward and create a more positive relationship with money.

8) Rebuild and monitor your credit score

Financial upheavals can negatively impact your credit score. To rebuild and maintain a healthy credit profile:

Pay bills on time: ensure that all payments are made promptly to avoid late fees and negative marks.
Keep credit utilisation low: aim to use less than 30% of your available credit.
Regularly check credit reports: Monitor your credit reports for inaccuracies and dispute any errors immediately.

A strong credit score is essential for securing future loans or favourable interest rates.

9) Set clear and achievable financial goals

Establish both short-term and long-term financial objectives to provide direction and motivation:

Short-term goals: These could include creating a functional budget or saving for a specific expense, such as a vacation.
Long-term goals: Consider goals like purchasing a home or planning for retirement by starting a pension.
Use the SMART criteria – specific, measurable, achievable, relevant, and time-bound – to set goals that are realistic and trackable.

10) Continuously educate yourself on financial matters

Empower yourself with financial knowledge by:

Reading books and articles: Explore personal finance topics like budgeting, investing, and retirement planning.
Attending workshops and seminars: Enhance your understanding of money management through expert-led sessions.
Taking online courses: Stay updated on financial strategies and tools that can help you navigate changing circumstances.

The more informed you are, the better equipped you’ll be to make sound financial decisions and adapt to new challenges.

Start your journey toward financial independence

Breaking up with bad money habits is not just about surviving a breakup – it’s about embracing a journey toward financial independence and long-term stability. By implementing these strategies, you can transform a difficult period into an opportunity to establish a robust financial foundation for a secure and prosperous future.

Remember, taking control of your finances is a gradual process that requires patience, discipline, and continuous learning.