Once the separation is official and the legal aspects are settled, there are a few financial matters to take care of to make sure you start your new life on the right foot. Whether managing your finances is completely new to you or you’ve been doing it for a while, it’s never too late to hone your skills. Whatever your situation, an advisor can give you the guidance you need.
Balance sheet and budget
Now that you’re on your own, it’s time to take a detailed look at your financial situation. This is essential to creating a balanced budget that takes your new circumstances into account.
Drawing up your personal balance sheet allows you to calculate your net worth by making a list of everything you own (your assets) and everything you owe (your liabilities) in real time. In most cases, you’ll have already done this when you separated in order to divide up the assets and calculate any support payments.
Once you’ve done your balance sheet, you can draw up a budget based on your needs, your financial commitments (income and expenses) and what you can afford. A budget management tool - This link will open in a new window. is available online to help you create a realistic, detailed budget that will support your efforts to manage your personal finances.
Setting up a rainy day fund - This link will open in a new window. will give you peace of mind. In case of an unforeseen event, the money you’ve put aside will serve as a cushion to help you cover certain expenses without having to dip into other savings. A good rule of thumb is to save the equivalent of 3 months of expenses.
Adjusting your insurance coverage
Also, to make sure you’re protected against unforeseen events, review all of your insurance products to make sure your coverage is right for your new needs and financial situation.
If you were previously covered under your spouse’s group insurance plan, there’s no time to spare since your coverage will have ended. You may be required to register for your provincial health insurance plan. Otherwise, if you’re the primary insured on a plan with couple or family coverage, be sure to remove your former partner as an insured and/or beneficiary. You’ll also need to change your coverage type from family to single-parent or from couple to single.
You should also think about updating your individual coverage, either by reviewing your disability and life insurance needs, or by enrolling in this kind of insurance. Your financial security advisor can guide you through the process and help you identify your individual needs.
If your former partner is currently listed as the beneficiary on your insurance policies, consider appointing a new beneficiary.
Change of status
Also note that your tax status changes once you’re separated. You need to notify the different levels of government right away, as this will affect advance payments of tax credits you’re entitled to and amounts you receive under social and tax assistance programs (child benefits, for example). Notifying the tax authorities promptly will keep your file up to date and avoid any unpleasant surprises.
Starting your new life will be much easier if your personal finances are in order and up to date. And the peace of mind you’ll gain will help you get back on track and start this new chapter of your life on the right foot.