A few years ago,I met a single father who asked me if it would be too late to start a financial plan for his daughter after the demise of his wife. His biggest concern: where should he start?
Admitting the fact that you need a plan to achieve your goals is exactly where you start.
For people who have recently separated or lost their spouse the challenges are many. One of them is a sudden cash inflow in the form of settlement/ claims/ employee benefits. The susceptibility of this single parent is known to many and hence it is important to exercise extreme caution before making a decision on this money. You should preferably put off decision making till such time you can think rationally and find somebody you can trust to guide you well. Your childs future has to be kept in mind at all times.
If the partner had passed away,then closing all bank accounts,making all insurance claims,liaising with the employers to get all the benefits and the like might take 3-6 months,if you are lucky. This might have to be done on priority. If the partners had separated,closing joint accounts,changing nominations etc. have to be done to avoid misuse. If investments have been made in the name of the minor child,account handling rights to guardians have to be changed.
Now,there could have been some decisions your spouse would always take. Usually decisions relating to family finances are handled by one of the partners in the family,while the other is passive. If the decision making partner is gone,the other partner now has a lot of learning to do.
Again,if you were not working earlier should you now take up a job? If yes,who will take care of children. How much can you expect to earn? Can you afford a day care? These are critical decisions that will impact long term financial health.
If you had been the sole earning partner,your insurance and investment needs will actually come down. You will have to quickly redo nominations. If your partner was also earning,now your family income will come down,while your childs expectations may not. You will have to redo your goals and review your financial plan to make it relevant for your changed circumstances. The childs demands on life style or luxuries will have to be compromised,but his/ her long time needs cannot be. This would be moment of truth for you on whether you can look into the future with hope,or will you fire fight every single day.
If you had a succession plan in place,it is due for changes. But if you never got a Will written,you should get it done as soon as possible because now with the loss of a natural guardian your childs interests have to be adequately protected case of any eventualities.
It is no easy job. You will have constant doubts,fears and apprehensions. But you are not alone. If you create a robust support system and openly seek help,constantly upgrade yourself and look forward with faith,you will be all right.
Author is Founder & CEO,Freedom Financial Planners