Managing your finances during separation and divorce
- Financial Planning
Facing separation or divorce is never easy. Emotions are set loose and practical matters such as financial planning may take a back seat.
While divorce is difficult for both parties, women are more likely than men to experience financial hardship after divorce, according to Relationships Australia. And with assets and income split, your retirement plan may be compromised and it can seem harder to regain financial security.
Senior Supervisor for Relationships Australia Victoria, Rosalie Pattenden, says in her experience women who are separating are less likely than men to consider finances. “A woman may be inclined in the settlement to accept less than she should, and men tend to go into business mode,” says Pattenden.
If your relationship is heading toward rocky ground, protect yourself from future headaches with these financial tips.
Personal finance coach, Michelle House, says you need to create a money plan. “If you’re not the primary money manager of the household, practise how you will do this.” Think about your primary needs (shelter, food, clothing, electricity) and, “start living as you are divorced,” she adds.
It’s also a good idea to record everything, says Certified Financial Planner and co-founder of Aspire Retire, Olivia Maragna. She recommends thinking about your assets, what you owe (such as mortgage repayments), and understanding your spouse’s income and financial worth in order to reach an equitable settlement.
Create your own identity
It’s important to create your own financial identity, according to Maragna. In addition to cancelling joint bank accounts, you should consider setting up utilities accounts (internet, telephone, electricity) in your own name, creating a new email address, updating your wills, power of attorneys and insurance and superannuation beneficiaries.
See a financial advisor
A divorce in midlife and beyond comes with its own set of challenges. Empty nesters don’t have to worry about child support, but splitting accumulated assets can be complicated and you may have to rethink your retirement plan.
Melinda Houghton, Director and Senior Financial Planner at Houghton Strategic Solutions, says it’s important to arm yourself with up-to-date information and professional advice. She also warns against seeking advice from any professionals who are in a conflicted position with your ex-spouse. “Get recommendations from people who have been through similar circumstances, but do not use the people you already use,” she says.
For support during a separation or divorce, visit the Relationships Australia website.
Have you gone through a separation? How did you deal with the financial side of things?