Financial Planning After Divorce: Where Do You Start?

Divorce can change much more than your relationship status. It can affect your household income, expenses, assets, insurance, CPF arrangements and plans for the future.

Once the dust settles, one of the most important steps is to review your finances and make sure they reflect your new circumstances. You don’t have to tackle everything at once. Start with these key areas.

1. Review Your Bank Accounts and Regular Payments

If you previously shared finances with your spouse, check your joint bank accounts, supplementary credit cards and GIRO arrangements.

Review which payments are still relevant, who is responsible for them, and whether any arrangements should change. This is also a good time to create a clearer picture of your own monthly cash flow.

2. Revisit Your CPF Arrangements

CPF is an important part of retirement planning in Singapore, so divorce is a good time to review your CPF-related arrangements.

Pay particular attention to your CPF nomination. A CPF nomination is not automatically revoked simply because you get divorced. If your intended beneficiaries have changed, you should review and update your nomination accordingly.

3. Review Your Insurance Coverage

Your insurance needs may change after divorce, particularly if you have children or other dependants.

Review your existing policies and consider whether your coverage remains appropriate for your new financial responsibilities. You should also check the beneficiaries or nominees associated with relevant policies and arrangements.

4. Update Your Will and LPA

Your estate plan should reflect your current wishes and family circumstances.

Review your Will and Lasting Power of Attorney (LPA), especially if your previous arrangements were made while you were married. Consider who you want to benefit from your estate and who you would want to make decisions on your behalf if you become unable to do so.

Importantly, don’t assume that updating one document automatically changes every other nomination or arrangement. Each should be reviewed separately.

5. Create a New Budget

Your financial situation may look very different after divorce. You may now have a single income, new housing costs, child-related expenses or other financial commitments.

Start by listing your income, essential expenses, debts, savings and ongoing commitments. A realistic budget can help you understand your new financial position and identify where adjustments may be needed.

6. Rebuild Your Financial Goals

Finally, think beyond the immediate transition.

Your previous financial goals may have been built around two people. Now, you may need to rethink your retirement plans, savings targets, investments and goals for your children.

Divorce can be a challenging financial transition, but it can also be an opportunity to reset your financial plan around the life you want to build next.

The key is not to try to solve everything overnight. Take it one step at a time, review what has changed and make sure your financial arrangements continue to reflect your priorities.

Sources:

1. https://familyassist.msf.gov.sg/content/impact-of-divorce/impact-of-divorce-on-finance/managing-your-finances-after-divorce
2. https://www.channelnewsasia.com/singapore/cpf-nomination-divorce-review-beneficiaries-wills-marriage-3359211

Disclaimer:

The information provided is for general information only and does not constitute legal or financial advice. While care has been taken to ensure accuracy, information may change over time and may not suit your individual circumstances. Please seek professional advice before making decisions.