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Sudden money managers

When you’ve had someone helping you look after your money, it can be daunting when you go it alone. Here are three tips for making a successful transition to financial independence.

If you suddenly find yourself managing your money for the first time, whether it’s due to a death or divorce, it can be daunting.

You’ll find yourself needing to learn a new set of skills. But it’s important to know that as your knowledge grows, so will your confidence.

There are some common pieces of advice that apply to many women in this situation.

Start with your immediate needs

If your life is changing dramatically, there may be some important short-term goals you want to achieve to help you get things back on track. For example, you may be focused on returning to work, rebuilding your skill set through study, or you may have the needs of children to consider.

Making sure your immediate needs are taken care of is the first step to taking control of your money. Once you feel like this aspect of your life is under control, you’re better placed to start thinking about your long-term goals – like planning for your retirement.

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Master your cash flow

After a separation, it’s very common for women to be asset rich (for example owning the family home) but cash poor. This lack of cash can make it harder to rebuild your life and achieve your financial goals.

In situations like this, it’s essential for you to get a better understanding of your income and expenses (i.e. your cash flow). In some cases, you may need to sell assets to provide the cash you need for everyday spending. Or you may be able to invest your cash in a way that provides an ongoing income.  

The most important thing to remember here is to take action and seek advice as soon as you can: a financial plan will help you to get on top of these issues quickly.

Review your risk profile

A desire to be conservative is understandable, but less risk tends to result in less return over the long term.

While it’s always good to have some cash readily available for your short-term goals, it’s important to ensure you’re saving for the long-term and considering your risk tolerance against your objectives.

Where to from here?

If you’re in this position and you’re thinking “I haven’t done anything like this before”, that’s okay. There are people out there, like financial advisers, who have done it many times before.

Find someone you trust, sit down, work out what your situation, goals and concerns are, and go from there.

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