Financial issues are almost always part of any conversation surrounding divorce. People often find themselves burdened with more bills and less available income following the end of a marriage. While this is manageable for some high-income homeowners, most people in Alberta have mortgages, retirement savings, business investments, and other debt to consider. Following divorce, a reassessment of financial priorities may be a good idea for those whose cash flow and expenses have changed.
Child care costs can amplify these issues. With the rising cost of child care, a Canadian man with a modest annual income of $51,500 who pays $650 per month for child care would have very little left for savings or unexpected expenses after paying for necessities. This tight budget, combined with outstanding debt, can make a divorced individual question the practicality of home ownership or career changes.
In situations like this, practicality is king. A risky career move or taking on more debt is unwise, despite the urge a newly-divorced individual may have to make the most of their new status. Those who have a house that they can reasonably afford should prioritize paying the mortgage before looking at retirement savings, provided they live in a part of Alberta with a positive real estate outlook. Besides being a need for shelter, the house is also an asset which can go toward retirement if money runs out.
Divorce may lead to a tighter budget, but this does not negate the need to save for retirement, invest in the education of any children and pay off mortgages or other debts. While a quick divorce is desirable for most couples in Alberta, is important for people stand up for a fair divorce settlement which leaves them in a reasonable financial situation. Discussing the terms of divorce with a family lawyer can help someone seeking a divorce ensure they are not left in a compromising situation following the proceedings.
Source: Financial Post, “Divorced dad should save the sculpting for retirement and pay the mortgage down pronto“, Andrew Allentuck, June 30, 2017
