by Jenny Smedra
No matter how long you spend with someone, breakups are hard. We had spent nine years sharing and building a life together. Then suddenly, the future I had spent nearly a decade working towards unraveled. Instead of planning a wedding, I was now deconstructing a life that would never exist.
While there are many of the same emotional parallels to a divorce when unmarried couples separate, it presented completely different financial circumstances. While it was painful and almost impossible some days, loved ones told me to look to my future. So, I took their advice literally. I began to envision what could be and used financial planning after a breakup to help me move on.
Dividing Up the Finances
One would think our breakup would be simpler than divorce since there was no paperwork involved. However, in some ways it was even more difficult to navigate without a legal roadmap. Although we were not bound to each other by law, it was much more complicated than saying goodbye and returning each other’s things. We had travelled the world, supported each other through career changes, and acquired significant assets and debts over time.
Thankfully, things ended amicably and we worked through it like mature adults. The most practical first step was to disentangle our finances. We had always maintained separate bank accounts, so it was just a matter of settling current outstanding debts and removing information from accounts. First, we tallied up all the bills including rent, utilities, and credit cards. We then split the cost down the middle. After we paid the balances, I transferred everything to his name since he would be the one staying.
Unfortunately, our breakup came before the end of our lease and my return flight home. Although somewhat awkward, we decided it made the most financial sense to share the apartment until then. We would avoid the costs of the penalty to break contract and find short-term accommodations. In exchange for two months’ rent, it seemed fair that he kept the large pieces of furniture and electronics we had purchased together.
Once the biggest questions were answered, it became surprisingly easy when we reached the line items. Choosing to leave everything behind meant there wasn’t much left to decide. He returned the shared credit card to me and erased my personal information from any shared streaming accounts or apps. With just a few clicks of the mouse, every remaining connection we had was gone.
Financial Planning After a Breakup
Now that I was flying solo, there was a huge shift in my worldview. I was no longer planning for “we” since now it was only me. It took a few months to adjust and un-learn the habits I had created while managing the money for two people. Now, I was living on a single income which meant half the earnings, but also only half the expenses. It also gave me the opportunity to analyze my spending habits and reprioritize my financial goals.
The next step I took in financial planning after a breakup was to create a new monthly budget based on my changing lifestyle. This transformation also came with a new career path and residence as well. As I started building my new business venture from the ground up, I agreed to stay with my parents to help my family with child and elder care. It proved to be a good financial solution all around. Not only did it give me a step up as I struggled to establish myself, but also provided them much-needed relief.
Paying Down Debt
Looking at my monthly expenses, I realized that I spend very little beyond basic necessities. I have lived on barebones budgets for years and the pandemic made it even easier not to go out and spend money. Since I was also saving more by sharing living expenses, I had the opportunity to focus on paying down my debt. Even with meager monthly earnings, I was able to pay off all my debts within six months! That was a huge milestone in my financial planning after a breakup.
One of the most important things I did for my future was to face my financial fears head-on. After years of avoiding it, I finally got serious about retirement planning. Although we had spent nearly a decade together, my ex and I had never made a clear financial plan for the future. Looking back, this should have been a red flag. But, part of his charm was the ability to live in the moment. Now, I knew it was time to look ahead.
While my parents had taught me how to save and avoid huge loans, I never learned much about investing. Quite frankly, any topic relating to investing and finance in general intimidated me. But, I knew I had to put the foundation in place and start saving for retirement.
Like I do with all my problems, when I don’t know the answers, I began reading. Thanks to the free Morningstar resources, I educated myself in the basics and found a broker to manage my accounts. With the help of my financial advisor, I now have a diverse portfolio including IRAs, mutual funds, and bonds.
Setting Myself Up for Financial Freedom
Looking back on the last year, there has been a lot of personal, professional, and financial changes in my life. However, it has also encouraged an immense amount of growth as well. By focusing on financial planning after a breakup, I was able to turn one of the most difficult times in my life into one that led to self-improvement. Although it is easy to kick myself for my mistakes and foolish decisions, I am already in a better place than I was.
The breakup caused me to take a hard look at my life and figure out what I wanted to accomplish with it. By focusing on improving my financial health, I embraced the challenge and have built something entirely my own. It has also emboldened me to push harder to see how far my ambition can take me. Part of reclaiming my identity has involved taking risks and no longer holding back out of fear. With each new accomplishment and financial milestone, I gain a little more confidence and get one step closer to the future I want for myself.