The impact of a marriage breakdown can be stressful and financially traumatic for both partners. When you separate, the income that supports one home now has to support two. The separation process can rapidly deplete savings and assets. You can alleviate some of the stress by tackling your top priorities first. Being prepared will help you reorganise your financial and family responsibilities in an efficient manner.
Steps to managing your finances
- Seek help from legal and financial advisors to help you manage your divorce.
- Contact your bank to close your joint accounts and open a savings account in your own name if you don’t already have one.
- Start listing down assets and loans held in your name or under joint names. Examples include the family home, car, investment properties, and insurance policies. Advise your lender of your separation and stop all redraw facilities on joint accounts.
- Close all joint credit cards.
- Gather and organise your financial documents – account statements, investments, insurance policies, tax records, etc.
- Note down the date of separation – You’ll need proof that you and your partner have separated for 12 months before you can file for divorce.
- Update all your utility bills in your name or have it taken off if you are not staying in the same house.
- If you were renting as a couple, update your rental agreement if the lease is in your name or joint names.
- Create a budget to track your income and expenses. Having a budget will help you adjust to new changes in your cashflow.
- Get in touch with Centrelink to see if you are eligible for any financial assistance from the government. If you receive income from Centrelink, you’ll also need to inform them of the change in your relationship.
- Update your Will, Power of Attorney, insurance policies, and superannuation. With a major change in your life, it is essential that you review and update the beneficiaries to your assets.
- See your financial advisor to create a new financial plan. They can advise you on ways to secure your financial future with wealth accumulation strategies and retirement planning.
When to get financial advice
The allocation of assets and debts in your divorce settlement affects your financial situation, tax obligations, and retirement goals. You need to seek professional financial advice before accepting settlement offers because the impact of your decision can be long-lasting. A financial advisor will ensure your settlement offer is aligned with your needs and provide guidance so you can make informed decisions before proceeding with the divorce settlement.
Rebuilding your wealth, rebuilding your life
It’s common for one partner to handle most of the household finances in a marriage. For the partner who has relied on the other to take care of money matters, sorting out finances from a divorce is an overwhelming task. They face the challenge of dealing with new responsibilities on top of having reduced income and debt they didn’t have to manage before.
Women with young children face a bigger challenge when it comes to recovering their income after divorce. Women often take a break from her career to look after children. This leads to missed career opportunities when returning to work after a period of absence.
Both partners are likely to experience a reduced standard of living. In severe cases, individuals will struggle to own their own home, save for super, and support their dependent children. It’s important to conserve your money and spend it wisely. Avoid making impulsive financial decisions in times of stress.
Getting your finances back on track after a relationship breakdown often requires you to continue working or get back into the workforce. The extra income helps with rebuilding your savings and maintaining a sense of security.
Rejoining the workforce provide additional benefits on top of having extra income. Work can build your self-confidence, bring you a sense of purpose, and the chance to expand your social network. As you rebuild your life, set some new life goals for yourself. It’s a good time to develop clarity in terms of where you want your life to be 5 and 10 years from now.
Contact Moiler to find out how financial planning can help you rebuild your wealth and secure your financial future.
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