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It’s over. You and your partner have broken up. We’ve all been there. (Some of us, like Jennifer Lopez, are practically part-time residents.) If it makes you feel any better, we always thought you were too good for you-know-who. Still, as one of the all-time weepiest breakup songs puts it, “love hurts.” We can’t help with the heartache, but with the guidance of Wealthsimple Portfolio Manager Zoe Wolpert, we’ll do our best to ease any potential money headaches. (Note: if you’re married or in a domestic partnership, you’ll avoid migraines by seeking legal help to unwind things.) Before you even update that relationship status online, follow these simple steps in chronological order to make sure you emerge on the other side in the best possible shape. You might even make a certain someone jealous.
1. Create an emergency fund.
You do already have an emergency fund, right? A breakup can be an extraordinarily expensive life event, on par with a job loss or unplanned medical emergency. You may need to cover first and last month’s rent (plus security) on a new apartment, buy or lease a car to get to and from work or hire movers to collect your belongings. Walking out the door or changing the locks may feel cathartic in the moment, but racking up thousands in credit card debt will only deepen your woes in the long run. Try to amass a nest egg to cover your life transition. "Think of your emergency fund as your safety net," Wolpert says. "Ideally you want to have 3-6 months of expenses set aside, but something is better than nothing. Do what you can."
2. Change your passwords. Now.
Even if you and your ex intend to remain best friends who call each other’s moms on their birthdays and share custody of that adorable Labrador puppy, it’s time to hit reset on your digital security. “This is low hanging fruit,” Wolpert says. “It's so simple to do, and in the rare event that something happens, you'll kick yourself for not doing it.” Wolpert recommends keeping things simple by changing all of your passwords in one fell swoop: bank, credit card and investment accounts, Netflix and Amazon subscriptions, joint cell phone plans, even social media and email accounts — every one of them provides an opportunity to access your information, and with it, your funds. (Though many financial institutions like Wealthsimple offer two-factor authentication that makes it difficult for others to access your accounts, this service sometimes requires opting-in.) Even if you don’t share account passwords, if you and your former beloved ever shared a computer or other devices as well as a bed, it’s possible your password login information has been saved — making it accessible by your ex or anyone who happens to pick up that old iPad. So don’t wait.
3. Exit the joint chequing account. It might get tricky.
Not every split is amicable. An angry ex can damage you financially. Smart uncoupling requires fiscal self-care, in the form of a separate bank account. If you’ve been using joint chequing, open your own personal account right away. Liquidating joint accounts can be tricky, since whatever is in them is legally the property of both signatories.
If the breakup is contentious, dividing these assets may eventually require the assistance of a professional mediator, or even attorney, but first things first.
4. Open a new account in your name only.
“Start fresh by setting up your own bank account and then come back to the issue of the joint account later,” Wolpert advises. Once you’ve opened your own brand-new account, make sure you update your employer so paycheques get deposited into the new account.
5. Now take your name off the cable bill.
If you’re the one moving out and the cable or utility accounts are set up under your name, call each company and request your name be removed from them immediately. Be sure to inquire about any secondary credit cards your ex may have attached to your accounts. Don’t tempt fate. Unpaid bills can wreak havoc on your credit rating, which reminds us…
Go online to request your report from one of the big three credit reporting agencies, TransUnion, Equifax, or Experian. While these companies will certainly try to sell you various other products, they’re legally required to provide you one free report annually. This report will show you every loan you have outstanding — be it a mortgage, car loan, or credit card. Don’t recall purchasing a Jet Ski? Investigate! Unscrupulous partners have been known to open credit cards using their partner’s personal information and rack up debt. Your new life is going to require good credit. And speaking of credit, even if you can’t get out of bed some mornings, stay current on any recurring payments that are in your name. “This is a super emotional time, but don't forget to make those payments because that's, unfortunately, the simplest way to ruin your credit score.” The lower the score, the higher the interest rate you’ll pay.
7. If you haven’t been the house accountant, it’s time to get the big picture of your finances.
What do you own? What do you owe? You need a complete overview of your finances, especially if your ex held the reins on your various bills and accounts. Wolpert suggests creating a document listing all your assets and debts — account information and balances, investment statements, tax returns, auto loan and mortgage statements. You may discover the picture isn’t complete, and right now, that’s okay. “If there are things that you don't have information on, put those down too and commit to figuring that stuff out,” Wolpert says. “You need to know what the situation is today if you're going to set yourself up for the future.”
8. If you’ve made your ex a beneficiary in your retirement accounts, life insurance or even your will, you'll need to update that.
9. Now’s the perfect time to make a new budget.
Once you’ve collected the bits and pieces of your financial picture, it’s time to go full Marie Kondo and ruthlessly confront any inefficiencies in your monthly budget. Now that you’re a single-engine earner, perhaps splurging on a family of four’s entertainment options — Netflix, Amazon Prime, Crave, and Spotify — is more than your budget can bear. Review your last six credit card and chequing statements to identify all your recurring debits. You’ll likely find one or two subscriptions you (or your emotionally stunted, Disney-Plus-watching ex) didn’t even know you had. If you shared a car, maybe you’ll realize that in the post-Covid, work-from-home world, it’s worth ditching those former rush hour wheels altogether in favour of the occasional grocery run in an Uber or Lyft. “Look at the bigger expenses, like a car, first since that's going to give you the most saving potential right off the bat. And then move down the list from there,” says Wolpert.
10. Ask a fiduciary.
Sure, a new life on your own can look scary. But a few financial adjustments — along with the emotional ones — combined with some new, sound financial planning advice will prove invaluable. You may decide to move your accounts to a new investment advisor. If you do, understand that most of the best ones — and, naturally, we include Wealthsimple on the tippy top of this list — will pick up any administrative fees that other institutions might assess to move your account. We have a ton of great investing articles to check out that may help get you up to speed on the basic dos and don’ts of investing, but the absolute first thing to ask any prospective investment advisor is whether or not they are a fiduciary. “A fiduciary is an advisor who is legally obligated to do what's in your best interest, not their own,” Wolpert explains. “Wealthsimple and our advice team are, but most are not. There are a lot of dishonest players out there, so whether you use us or someone else, I can’t overemphasize the importance of investing with a fiduciary.”
Just remember: you’ve got your whole life ahead of you!
Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently hosts "The Originals" podcast and writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier.