How to prepare your finances for a breakup

A breakup sucks — even if it’s necessary and you’re better off without it. Emotions play a big role and life changes. Your to-do list fills up with loaded logistics, like figuring out who gets the cat or how the hell you can afford to live on your own.

We don’t know what to tell you about the cat, but we can talk about the financial aspect. Finally, splitting can become difficult if you and your partner share money in some way or rely on each other financially.

If you are married, learn how to prepare your money for divorce. If you’re not married, here’s a guide to untangling your finances.

RECOGNIZE EMOTIONS

Breakups are often emotional. Those feelings can influence behaviors and decisions, says Alex Melkumian, a licensed marriage and family therapist and founder of the Financial Psychology Center in Los Angeles.

For example, if you are angry with your partner, you can do anything to leave the relationship quickly. This can mean giving up the cat and the rent-controlled apartment. Or if you fear being financially insecure on your own, you may remain in an unhappy relationship.

A note on this type of dynamic: When a partner uses money for power and control, they are entering financial abuse territory. Forms of financial abuse “include tactics to hide information, restrict the victim’s access to assets, or decrease access to family finances,” according to the National Network to End Domestic Violence. Find out more on the NNEDV website.

MANAGE THESE FEELINGS

If you’re not experiencing financial abuse but feel like emotions are clouding your judgment, first acknowledge your inner critic. That voice “can be really discouraging, judgmental and embarrassing,” says Melkumian.

Maybe your inner critic berates you because, for example, you chose the wrong person or bought a car with them.

Her inner critic “overstates the importance of every small decision,” he adds. The voice might insist that if you don’t do something right, your life will be ruined.

Melkumian has some of its customers voice these criticisms out loud. Give it a try and ideally you will hear how mean and unfair this voice is. Or he suggests asking, “Would you let someone else talk to you or a friend like that?”

Also, be careful not to sacrifice too much on this breakup to “keep the peace,” says Kaylin Dillon, a Lawrence, Kansas-based certified financial planner who focuses on couples and families.

“Your future self is counting on you to think of your best interests,” she says.

INVENTORY OF YOUR MONEY

Getting organized can help you determine next steps, Dillon says. So log into your financial accounts and note the following:

• RECURRENT EDITIONS. Distinguish those you share from those that you or your partner pay alone, says Dillon.
• FINANCIAL ASSETS. These are things you own that have monetary value, such as B. a house, a car, stocks or bank accounts. Be aware of which assets are in your name, which are in your partner’s name, and which are being divided (if any), says Sally Boyle, a Hanover, New Hampshire-based CFP and certified divorce financial analyst.
• NET ASSETS. This is your assets minus any liabilities or money you owe, such as B. Debts and loan balances. Record that number, too, says Boyle.

If you and your partner feel like you can do this exercise together, do so. Set aside time for this so you can feel mentally and emotionally prepared.

“Your first mediation happens around the dinner table,” says Boyle, who is also the founder of divorce planning service The Better Half. When you’re ready, delve into differences in net worth, she says, and how to deal with other tricky situations, like getting married. B. Shared Assets.

CONSULT PROFESSIONALS

Perhaps this discussion will help you determine next steps. This likelihood depends on several factors, including how messy your finances are and the circumstances of your breakup.

Split subscriptions are easier to split than real estate, for example. And it’s easier to work with someone who’s calmly willing to break up than it is with someone who’s sticking with the relationship — or someone you can’t look at.

Professionals can help put finances and emotions in order. They can also fill in knowledge gaps when one partner knows a lot more about money than the other. Dillon often sees these gaps and says those who know less are at a disadvantage.

So who can help? If that first step of assessing cash flow is overwhelming, Dillon says a financial planner or budget coach can help you understand your money.

If emotions are holding you back, Boyle suggests a financial therapist. Mediators also help facilitate conversations in a neutral way, Boyle says, adding that their divorce clients often attempt mediation.

A lawyer can be helpful if you both share larger assets like a house, Dillon says. It may also be worth contacting them if your incomes and assets differ significantly and if one partner is financially dependent on the other. (However, Boyle notes that lawyers can be expensive.)

Whether or not you decide next steps with a professional, aim for optimism.

“It’s a hard pill to say, ‘OK, it didn’t work this time,'” says Melkumian. “But there will be another time.”

This column was provided to The Associated Press by personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice. Laura McMullen is a writer at NerdWallet. E-mail: [email protected]. Twitter: @lauraemcmullen.