How to protect your financial wellbeing during divorce or separation

Estimated reading time
 5 min

Learn all about

• The importance of having a network during divorce
• Your options for maintaining your financial wellbeing when going through divorce

Way back in the ninth century, the world welcomed its first prenuptial agreement – probably signed with a feather and ink! The infamous document was designed to ‘protect wives’ from the risk of financial instability after divorce.

A couple of millennia on, the world of love (and leaving) looks a little different. But it still takes a village (and some careful financial planning) to ensure both members of a partnership are prepared for the costs of divorce or separation.

While we can’t ease the emotional burden a relationship ending, we’ve got some tips and advice to limit the emotional and financial strain when you’re going through it.

Having someone to count on

The range of emotions people can go through during divorce is huge – from shock to relief, sadness, grief and depression. Many people draw on support from family and friends during this time. In fact, research from ANZ shows that having access to social support networks is important to enable financial wellbeing – whether you’re seeking support from family, friends or your wider network.

But this support isn’t always available to everyone. And even if it is, you may find support and advice from an independent person helpful – such as a marriage guidance counsellor or mediator. A financial advisor falls into this category too, especially if you need help separating complex accounts.

The government offers a range of information about divorce and other matters at Family Relationships Online^disclaimer. If you or your children are affected by violence or are in danger, you should seek help immediately. In an emergency, you can call 000 for the police. You can also call 1800 RESPECT^disclaimer for details on support and safe refuge in your state or territory.

Brain hack: We sometimes have the tendency to overestimate our ability to control events in our lives. This is called the illusion of control. When it comes to divorce negotiations, the illusion of control could see you overlook possible contingencies or alternative scenarios in a co-parenting plan or a financial settlement. To overcome this way of thinking, reach out to your network or get professional advice rather than relying on your instincts. This can provide a grounded perspective and help you navigate this tough stage of life.

Taking care of business

Money might be the last thing on your mind while going through a breakup. But having the right financial plan in place can mean the difference between a relaxed and comfortable lifestyle in the years to come – or a long period of stress. Here are a few things to keep in mind:

• Organise your accounts

  Joint bank accounts, credit cards and other shared financial commitments can be a great way to save money while you’re partnered up, but they can also become tricky once you’ve separated. You could easily wind up responsible for debts your partner has created. Take steps to limit this risk by separating joint accounts as soon as possible.

• Budget for fees

  The divorce process itself can be pricey with legal documents to change such as your estate plan, will or mortgage. And there may be legal fees if negotiations are required once you decide to part ways. Make sure you’re aware of the costs before agreeing to anything, and keep a detailed budget to ensure you don’t run into surprises.

• Put things in your name

  After some negotiation, things like utilities and school fees may need to be transferred to ensure they’re being covered by the party responsible. For example, your home insurance policy may have been held in your soon-to-be-ex’s name. If it’s been cancelled and you suffer a loss, you may not be covered.

• Check the little things

  No one likes it when their movie streaming recommendations are messed with by a different user. Ensure all your subscriptions, loyalty cards and rideshare details are updated to the right card holder. These little costs may be small, but they do add up.

Remember, you may be eligible for government support payments via Centrelink if your family circumstances have changed. Head over to Services Australia or call 13 61 50 to see if you qualify.

Speak to a financial advisor

It helps to call on an expert to assist with splitting things fairly and without fuss. While understanding the ins and outs of shared and unshared finances is incredibly empowering, it’s the job of a professional to understand the nitty-gritty details and give you the best advice that’s tailored to your situation.