Separating or divorcing? Ease the financial impact and be ready for your new situation
Going through a separation or divorce raises a lot of questions. One of these relates to money. Given you’re likely to have many other issues to consider, it’s important to focus on finances as early as possible. The sooner you sort out your financial situation, the easier it will be to adjust to your new circumstances.
The financial effects
Studies have shown that women can often experience greater financial pressures than men after a relationship breakdown. For example:
- On average, it takes between six and seven years for a women’s income to recover to its pre-divorce level.
- In the first year of divorce, 60.1% of women experience at least one or more financial hardships, compared to 49.6% of divorced men.
There are many reasons why women are more likely to suffer financial pressures. This can sometimes happen because women work part-time to accommodate family responsibilities. If less money is coming in, this can lead to women having less in superannuation. So it helps to make sure you’re prepared so you can look forward to your retirement.
Impacts of relationships ending
When you separate from your partner you need to be prepared for an increase in costs and expenses. Keep in mind that these costs are only indicative and your actual costs may be higher or lower than those provided.
- Accommodation: If you need to move out of the shared home, you will have rental expenses or the costs associated with buying a new home.
- General living: Without a partner to share expenses with, you will be solely responsible for day-to-day living expenses such as groceries, car maintenance and utilities.
- Legal fees: You will need a solicitor if you are getting a divorce or have joint property that needs to be split, and fees range from $200 up to $600 per hour. It is possible to keep legal costs to a minimum by deciding who gets what and keeping things as amicable as possible.
- Divorce application fee: The cost of filing for a divorce starts from around $400, although this fee may be waived or reduced under certain circumstances, such as financial hardship.
“Taking control of my finances with the support of my financial adviser made me feel more confident about the future.”
– Rebecca, aged 41
Getting your finances in order
After a separation or divorce it’s important to get your finances fully sorted to help ensure your future is looked after. To some this may seem daunting, particularly if you weren’t responsible
for managing the family finances. But you can do it, and taking care of your finances will help you feel more independent and confident about the future.
Short-term financial considerations
B taking care of the aspects below as soon as possible, it may make the property settlement easier and more favourable.
Freeze joint accounts
Tak to a solicitor about freezing these accounts.
Gather together all of your financial information
The financial information you should collect includes details of bank accounts, credit cards, superannuation funds, any investments, recent tax returns and your mortgage.