The end of a relationship is a painful experience for all parties involved. The emotional impact can often go beyond the immediate couple to include additional family members and friends. Coping with the trauma can be a trying experience but it’s also important at this stage to make sure you put practical steps in place to sort many of the logistical issues that must be dealt with at this moment in time.
Foremost amongst these are the financial aspects. Ending a relationship will involve the dividing of property, including bank accounts and financial assets, and it’s important this is worked through in an amicable way that is fair and works for all parties involved.
If you are a partner going through this there are two aspects you will need to consider; one is your share of the current financial assets, the second may be the security of your income moving forward. If you have been dependent on your partner as the primary breadwinner this may be a time of major disruption for you.
Here are a few factors to consider to divorce on a budget:
- Your living costs may increase. If you’re going from a situation where you’ve had two incomes to meet your daily expenses to now surviving on your own, you may find things a little tougher. If you’re staying in the relationship accommodation you will now be left funding the rental or mortgage on your own with less income. Consider whether you should move in with family or friends, at least for a while. Or have someone else who can share the accommodation costs with you.
- Balance emotions with your rights. Not all relationships can end amicably but when it comes to considering your financial rights it’s important to be fair but firm. Don’t allow any desire to ‘get even’ cloud your judgement. Recognise your partner’s rights but don’t be afraid to exercise your entitlements either.
- Seek the financial support you are entitled to. This may take the form of maintenance from your partner if there are children involved. It may also involve finding out what Centrelink assistance you may qualify for. If there are children in the relationship this does complicate things further and it’s important you have a good understanding of the support you can get.
- Plan Ahead. Few people get the opportunity to prepare for divorce or separation. It can often be out of the blue for one of the parties. That said, you need to consider what financial needs you will have in the next one to two years and decide how you will provide for this. Setting a budget will not only help you financially but will allow you to feel you have exercised some control over your future.
- Evaluate your career prospects. Are you able to finance your needs for the foreseeable future? Will you need to restart a career, or possibly provide maintenance to allow your partner to take care of the children? Now is a good time to take stock of your skills and whether your current career path, or the one you plan to restart, will provide you with both the fulfillment and income you will need.
- Seek Help. This is an emotional time, but it is also one of the most disruptive financial periods in your life. Now is the time to call on others to help you through the process. A good financial planner or advisor can help you with cash flow management, planning your future financial needs and whether your current path will meet it. Your accountant can also provide you with tax advice on the consequences of liquidating assets you may own jointly. Your lawyer will be able to give you comprehensive advice on your rights and what you can expect from the situation.
- Consider your credit requirements. At some point in the future you may need a loan or mortgage. How you are assessed for this may depend on how your previous loans and mortgages have been structured. Talk to your bank or financial advisor about how you can build your credit rating going forward. Look to set up accounts and credit cards in your own name at the first available opportunity.
Separation is a painful period, but as much as you want to shrink away to lick your wounds now is not the time to be a passive passenger in your life. Find out your rights and obligations and take steps to transition to your new independent lifestyle in a way that works for all parties involved.
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The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a Financial Advisor or other finance professional.