It has never been more apparent than now that we all must be more aware of our finances writes Emma Ingham, and our financial situation.  The cost-of-living crisis that is so widely spoken about, and is affecting so many, is incredibly worrying.  For those who are going through a divorce or separation, times that worry by about, well, a million. 

That is why, when discussing a financial settlement in mediation, your mediator will help you look at your finances in realistic terms, by going through what is known as a “reality test” with you.  The term itself is not one, personally, I am particularly fond of.  However, the fact of the matter is, it is a hugely important part of the process.  If you wish to have any agreed financial settlement approved by the court by way of a Consent Order, the Court will want to see that the proposed settlement is affordable for both parties.  That everyone can meet their needs going forwards.  Yes, this is hugely important.  But it is also hugely important that the parties themselves know that their financial situation is secure.  That they are going to be ok. 

If there are divorce proceedings, during the financial disclosure process, both parties must disclose their respective incomes.  This is on an annual basis and on a monthly basis.  When looking at the monthly income, both the gross income and the net income will be recorded.   It is essential to see what is really coming in every month.  Then both parties will be asked to look at what they think their anticipated monthly expenditure will be going forwards.  Now this is where it gets really tricky.  At the moment, it is really difficult for most people to anticipate what their bills are going to be, whether we are looking at weekly food shop, energy bills or indeed their mortgage repayments.  But, if you are thinking of moving to a new house or even a new area and going from a two-income household to a one income household, having a grasp of what those bills are going to look like is going to be hard, but essential.  The mediator will be able to provide you with a list of items to think about.  A bit like a budget.  The big bills will be on there, like rent or mortgage repayments.  But it may also contain things like haircuts and birthday presents.  Things that you might forget to budget for but will inevitably come up.  Getting some numbers down in that budget is the first step.  However, as different options are discussed, maybe about where both parties are thinking of living in the future and in what type of property, the budget can be revisited.  And yes, sometimes, expenditure may exceed income and will need to be looked at again, and the numbers reduced.  Taking advice from professionals such as Independent Financial Advisors, Mortgage Brokers or the Citizens Advice Bureau may also be helpful, and your mediator will be able to signpost you to relevant people. 

I completely acknowledge that the reality test does not sound fun.  However, your mediator will be there to support and guide you through the process and will ensure that both parties are looking at any options realistically.  You’ll be pleased you did it in the long run. 

If you’d like help deciding what happens next financially after a separation then give us a call on 01306 32020 or email