Losing somebody can be hard enough to deal with on an emotional level but dealing with the financial realities of their death at the same time can be very upsetting and unnerving. For many, they are suddenly thrown into the role of controlling finances for the first time in their life. Having to take control of family finances and trying to get by on less income can be incredibly overwhelming especially if you have lived comfortably for a long time. Unfortunately, bill paying and other financial burdens don’t let up until the end of a grieving period. And there are also the funeral costs to consider at the exact same time.
Here Is What to Do First
When somebody dies, you are all of a sudden thrown in the deep end, and you don’t even know where to start. And, with the emotional side of losing someone making matters so much worse its hard even to know where to start. However, there are five things that you should do and consider sooner rather than later to help you deal with the many financial strains that losing someone can bring.
- Take Your Time to Adjust Before You Take Action
The first step is to simply refrain from making any major financial decisions during the initial shock of losing someone. Your mental and emotional state will need time to come to terms with the death which in time will help you think a lot clearer and more rationally. Then, if you don’t already have professional services in place such as a solicitor, financial planner or tax assistant then it’s time to get them in place to help you deal with the financial side of losing someone.
- Locate the Important Financial Documents
If you are already aware of the location of such documents, then this first step will be a relatively simple one. Otherwise, you are going to want to find these documents and store them in a secure place. Such documents may include insurance policies, investment paperwork, property deeds and a will. You will also need to have your marriage certificate and your partner’s birth certificate. When notifying your insurance company, financial organisations and creditors you will need to produce a certified copy of your partner’s death certificate, so it is important to have several copies of this.
- Learn How to Budget and Handle Day-to-Day Finances
Whether you kept to a budget whilst you were married or not isn’t relevant, you are going to have a whole new set of expenses to deal with and will probably have different sources of income than you had previously. Break your expenses down to monthly and annual payments. Once you have that all organised, write down all of your various sources of income, salary, rental income, etc.
What’s essential in budgeting is to let your income drive your expenses. This means that once you know how much money goes into your bank account each month, create a budget that will limit your spending to the amount of income you have. While this seems very basic, most people let their expenses drive the process, meaning that they spend money without taking a disciplined approach and hope that at the end of the month they don’t go into debt.
If you are used to handling day-to-day finances in your household, then you will find this step relatively easy. If not, then it is a good idea to assess your current financial situations and then make necessary cutbacks to save money however little it is. This could include cancelling certain services, subscriptions or any other discretionary expenses. A financial planner will able to help you calculate your current net worth, which is the total value of your assets minus the total debt that you are in. This information is essential and can help you develop an understanding of your current spending and future investment plans.
- Planning for The Future
Now that you independently hold your family’s financial wealth, you are going to want to consider how you are going to manage it for your heirs. A financial planner will be able to assist you with setting up an estate plan that you provide for you now and then for your heirs in the future. Your goals for the future whether they are personal or financial are a smart thing to consider. It might be a good idea to take classes in personal finance and money management if you lack these skills. Depending on your situation, you might want to find a support group for people who have lost a partner. These kinds of groups can be both a comfort and a resource as you move forward with your life.
- Windfall Payment
If you end up receiving a large sum of money from an insurance policy, make sure that you put it in the bank for 3 to 4 months. Don’t make any rushed or impulsive purchases or investments until you feel like you are in control and making rational decisions. There have been many instances where a surviving partner receives a substantial death benefit and begins spending it immediately, by buying all those things that “needed” to be purchased or by giving large gifts to children to help them out or to just be a loving person. Just remember that this money could prove very handy in the future so don’t spend it just because you have it.