Let’s face it- ‘Happily ever after’ doesn’t always work out and when it doesn’t, what you are left with if not planned out properly is a mess.

Divorce is something that the Australian Bureau of Statistics says affects a number of Australians every year with the below information:

Key points for 2017 include:

• The number of divorces granted increased by 2,428 (5.2%) in 2017 and the crude divorce rate increased from 1.9 divorces per 1,000 estimated resident population in 2016 to 2.0 divorces per 1,000 estimated resident population in 2017.
• The median age at divorce for both males and females was unchanged in 2017. For males the median age at divorce was 45.5 years of age and the median age of females was 42.9 years of age.
• The median duration from marriage to divorce in 2017 also remained stable at 12.0 years.

Half of those going through a divorce will also have children.

Dealing with a divorce or long term break up can be one of the hardest times in your life, both financially and emotionally as I have seen this happen to my parents. There is alot to think about and a number of decisions to make especially when you have children involved.

Here are the top tips to ease the burden of what a divorce/ break up may bring:

10 ways to avoid financial hardship through a divorce

1. Close any joint bank accounts as soon as possible and come to an arrangement as how to separate any leftover funds.

2. If you’re even contemplating leaving (or have any reason to believe it is on the cards), make sure you have an emergency cash reserve built up.

This is to cover ad-hoc expenses that will come up after the break up and will be needed when getting used to a new routine and lifestyle change.

Every man and woman, regardless of marital status, needs one and this shouldn’t include having funds available on your credit card.

3. Note down any outstanding debts and payments on joint credit cards, loans and mortgages, utilities and leases.

You can be held responsible and non-payment can impact your credit rating if your name is still on the statements and payments have not been made. Come to an agreement as to how these will be paid off and whose responsibility it is.

4. Work out what assets are in your name and joint names, and what will stay and what will be sold off to fit with your new financial direction.

It doesn’t matter whose name the asset is in: all assets must be considered and will be included in any property settlement which is separate to a divorce agreement when handling the legal requirements.

5. Never rely on income that may cease, for example, spousal maintenance or child support as this can be switched off any any time and lead to lengthy battles in the courts.

6. Have a look at who your Power of Attorney is and how your Will is set out- Who does the assets go to? Check who you nominated as the beneficiary of your superannuation and life insurance as the consequence of not changing this will mean your ex-partner could potentially receive an unintended windfall if you suddenly pass away.

7. Seek expert financial advice in regards to your situation- Don’t ask your lawyer or Accountant as they are not authorised or trained in such matters. Look to speak with a Financial Adviser who will work with you and look at your past situation and future options to put in place a plan of action taking into account your current circumstances.

8. You will need a new budget as a percentage of your income will now drop if you were both working.

You will need to adjust your spending habits and be smarter with your money as there will be an adjustment period where you will most likely be dipping into your Emergency fund which you should have set up in point 1.

9. Restrain yourself from going out and splurging what funds you have with your new single life. It can be very tempting to rekindle friendships with those that are also single and go out clubbing or dinners, wines etc. Have your goals and stick to them.

10. Establish a fund for future goals like going on holidays or ticking something off your bucket list.  When planned within your means, this will be good for your physical and mental health as I have found recently dealing with my own divorce. Start planning and saving: this is a positive thing to look forward to when you go back to your work routine. it is easy to lose yourself and think there is nothing to work for if you don’t have goals.

As always if you need assistance in this matter and would like to speak to our team of Professionals further, please call our office on (02) 9188 1547 or email admin@rpwealthmanagement.com.au

*3310.0 – Marriages and Divorces, Australia, 2017

http://www.abs.gov.au/ausstats/abs@.nsf/mf/3310.0