The ending of a relationship can be difficult, particularly when there are children involved. Even so, it is important to take steps to rebuild your finances and become financially independent, sooner rather than later.
Where to Begin
First off, seek professional advice. Apply for legal aid as soon as possible; in some areas the waiting list is long, so the sooner you apply the better. Keep in mind Legal Aid require a deposit before they will even consider having a meeting with you. Clarify the deposit amount with your chosen legal aid office. You can check your eligibility to legal aid here before you officially apply. Unfortunately, Legal Aid allows for very few outgoings when considering your eligibility, ensure you read up on all of this before you apply.
If you are not eligible for Legal Aid, seek out recommendations for a good legal team to bring you through the separation or divorce process. With regards to court attendance for maintenance, it is possible to represent yourself, but be sure to leave your emotions at the door on your way in! Keep to the facts and have your financial information prepared in advance. In a perfect world, the maintenance would be finalised in the court that day and you can get on with your life. Unfortunately you are in Ireland, and dealing with the family law process is similar to entering Fawlty Towers, so the entire process drags out for an eternity!
Separation or Divorce?
Some individuals initially obtain a legal separation and go through the divorce process at a later stage. Leaving aside the financial implications, the work and stress involved in going through a separation or divorce is enormous, particularly if it’s not amicable. For this reason, some (Like me!) opt to go straight to divorce. I knew I would be reaching a stable financial position by the time the divorce came around, so I was ready. Everyone’s situation is different, so choose the option that suits you best.
Divorce can take a few years to complete, but for those divorcing an abusive partner it can take a lot longer. Where abuse is involved, particularly financial abuse, the abusive partner is going to ensure they continue to control your finances for as long as possible. When the abusive individual begins to lose control, they will attempt to inflict as much financial hardship as possible, so ensure you protect your finances. If you have not already done so, please read my previous blog post here which discusses this further.
Realise your new financial position – Create a budget!
Prepare a budget that reflects your new financial position. It can be difficult to prepare a budget if you are awaiting the outcome of a pending court case for maintenance. Work with what you have so far; you can amend your budget with the updated information as things get finalised through the courts or mediation. You will need to prepare an ‘Affidavit of Means’ for any court cases, so preparing a budget now will help you with the preparation of the Affidavit of Means. I gave guidelines in a previous post on preparing budgets. If this is the first time you have created a budget, ensure you review this to guide you in the budget process.
Rebuild your finances by maximising your income
Once the budget is prepared, you will see exactly where you are financially…. which is probably not too great if you’ve recently separated. Look for opportunities to increase your income. Have you applied for social welfare assistance? I recommend calling Citizens Information, give them your current income details, and ask if you are entitled to any assistance from the department of social protection. For example, you may be entitled to the one-parent family payment. The working family payment is another option for families on a low income who meet the required working hours each fortnight.
If you are a working single parent, review your tax credits to ensure you are receiving the single person child carer credit. This credit can only be claimed by one claimant at a time. Make sure you review the eligibility criteria for availing of this tax credit. Also remember to keep all medical expense receipts so you can claim relief on these at the end of the tax year.
Cut your costs to regain financial control
Did your budget highlight any outgoings you could reduce? If you are working and use childcare, I recommend you check out the community childcare providers in your area. Community Childcare rates are lower than private childcare centres. Is the anticipated cost of childcare is preventing you entering the workforce? Ascertain how much assistance you can obtain from the National Childcare Scheme using their online eligibility calculator. When you have this figure, contact your desired childcare provider to find out how much your final bill would be after they deduct the NCS contribution. Government policies introduced over the past few years have helped to reduce the cost of childcare.
My childcare costs were nearly €1,300 per month when I first separated. This figure did not include the extra costs for camps and activities throughout midterm breaks or the school summer holidays. These childcare costs crippled me financially for the first few years as a lone parent. In addition to working fulltime, I was also training and completing my accounting exams. I had an overdraft of €1,000, which I used to pay towards my childcare for the first few years. Although an overdraft is one of the costliest forms of credit, I knew it would only be for a set period. It was also the only way I could pay my childcare costs at the time. I did contemplate quitting on many occasions. Then I’d remember the inadequacy of the Irish Family Law system and got kicked back into taking action to avoid being pushed into a position of poverty and deprivation, like so many other lone parents in Ireland. Thankfully the childcare cost reduced over time as my boys grew older, leaving only the younger two now requiring childcare.
Build your financial resilience
All the steps mentioned above will take time to complete. It’s not something that will happen overnight, it’s going to take a few years to get to a stage where you can start to rebuild your financial resilience and become financially independent.
It is important you start to save as soon as you can. It doesn’t matter how small you start, if €10 per month is all you have to save, save €10 each month. You can increase this amount over time as your financial position improves. You need to work towards building an emergency fund of a MINIMUM OF THREE MONTHS INCOME. When you become more financially stable, you could increase this to 6 months income set aside as an emergency fund.
*Warning* – if your savings rise above €5,000 you are not eligible for the back-to-school clothing and footwear allowance, even if you meet all other eligibility criteria for the payment.
Two important points
Be aware of everything that can impact your efforts to regain financial control and build financial resilience for your future!
It is wise to have maintenance arrangements formalised through the courts. If arrears accumulate, you will then have recourse through the courts. Although it can be difficult to get maintenance arrears paid, it is vital to ensure all arrears are recorded. This is important when a divorce is pending, and family assets are present. E.G., if there were €5,000 maintenance arrears, could this be used to reduce the settlement amount to buy out your ex-partners share of the property? …. just an idea! Keep track of everything unpaid/outstanding.
If you’re receiving minimum child maintenance from your ex-partner, but they’re contributing mortgage payments, please seek legal advice on this. Think about what’s happening here…the absent parent is giving little child maintenance to support their child’s upbringing, but yet they’re making payments in full to the mortgage. A solicitor can advise you if it’s possible to amend the allocation of their contributions i.e. increase the maintenance figure and decrease the mortgage figure. The same amount is being paid, its just recorded differently now.
The very first step in this blog outlined the importance of seeking professional advice. If you are divorcing and have a family home or other assets, please take your time making any important decisions. Think carefully how decisions you make now will impact your future. If it is an amicable breakup, then I recommend attending mediation to reach a suitable and fair outcome for all involved. The more groundwork you have done before finalising everything, then the cheaper it will be for you both. However, if your breakup is not amicable or abuse is present, then mediation will be difficult. For this reason, it is important to assess your entitlement to Legal Aid as soon as possible.
Financial abuse and its impact on legal costs
Please remember, Legal Aid is not free, it is a reduced legal fee. However, it will be nowhere near the usual legal costs. If you are dealing with an abusive individual, at least you know your cost from the outset with Legal Aid. An abusive individual will drag out the legal proceedings for as long as possible. Thereby increasing the legal fees for the abused individual without Legal Aid. This is a common tactic in financial abuse situations. The abusive individual strives to leave the abused individual financially ruined after the relationship ends. Unfortunately, the legal system in Ireland is often used as a tool to inflict further financial abuse.
It can be very difficult for the primary carer of the children to improve their career prospects and financial position. This leads to a cycle of poverty impacting generations to come. For this reason, a woman needs to really think about her financial future from very early on in the breakup.
Define your goal!
Start now, set out the goals you want to reach as a single parent. What would help you to achieve a financially secure future? Do you currently have a job, is there a possibility for promotion and a subsequent pay rise? Would you need to increase your skills and knowledge for this? If so, there are lots of free or subsidised courses on offer now, maybe one of these can assist? This process will take time. Remember, it is a marathon, not a sprint!
Did you enjoy reading this blog and find it beneficial? If your business is interested in Financial Education Talks or Workshops for your staff, please get in touch. A discovery call can be arranged to establish your requirements. Additionally if you require one-to-one financial coaching sessions, this can also be arranged.