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Preparing your finances for separation

Finances can be a significant source of stress – it’s not uncommon for financial issues to contribute to the breakdown of a relationship. This blog explores some steps you can take to prepare and manage your finances before and during a separation.

Separating from a partner is an emotional journey, and it’s important to acknowledge the stress that comes with it. Financial stress is often intertwined with the emotions of separation, as it can bring fears about the future and uncertainties about your financial stability.

Set aside time to consider your individual goals, understand your financial picture and potential living expenses, and decide what to do with your assets. Being clear on these aspects will help you identify financial priorities and areas for compromise.

Starting an open conversation about money can be difficult, but it’s an important aspect of separating.

Here are a few things to consider.

When you need help from financial professionals

There are a few financial experts and resources you may need during a separation.

A financial advisor can help you set your financial goals and guide you to reach them. They can also advise you on structuring your financial settlement to cover your short and long-term needs. You can book a free initial chat with an advisor in our network.

A financial coach can take more of a guiding hand during your separation, helping you understand the process, your financial literacy, your budget and the documentation you’ll need for your legal matter. You can book a free initial chat with a coach in our network.

Family law finance is available to you if you have a property division in your matter. This type of finance can help you pay upfront fees for legal and other professional advice to assist you in reaching a fair settlement. There are no ongoing payments – you settle the loan when you settle your matter. This is really helpful if you have equity in your home, but it’s tied up until you sell or settle your matter. JustFund is the family law finance provider we recommend. You can check if you’re eligible for this type of funding by filling in JustFund’s quick form.

Read on for more details on when you might speak with a financial professional and some tips for preparing your finances.

Open up about money

Money is often a sensitive topic, but discussing it openly during the separation process is essential. Always keep your spouse in the loop, and don’t make any choices about finances that impact both of you without speaking to them first. Keeping open lines of communication about money can help you understand each other’s needs and perspectives and make compromises and progress.

Develop your financial literacy

If you don’t have experience actively managing finances, it’s natural to feel overwhelmed. Reach out for help and educate yourself about managing money. A financial coach is a good place to start.

Understand your new goals and your partner’s goals 

Separation often means a shift from shared goals to individual ones. Take the time to reflect on your goals and use them as a basis for discussion with your partner. A financial planner can help you set attainable goals.

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To get in touch with the professionals you need, take the Q&A.

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Get a clear picture of your finances

Make a list of assets and debts held in both names. Record your income streams, expenses, and liabilities. This information will be essential for splitting finances and seeking advice or legal assistance. A financial coach can help you identify where the money is in your relationship.

Choose your priorities

Separation often leads to increased living costs for both parties. This is even more challenging when the cost of living is rising. Prioritise your expenses and focus on what matters to reduce financial pressure. The MoneySmart Budget Planner is a helpful tool.

Decide how to handle assets

Asset division can be a contentious issue during separation. A financial advisor can advise you on how a different split of assets, like property, savings and superannuation, may work for you. You should seek advice from an independent family lawyer or consider using a mediator to facilitate discussions and reach an amicable agreement. You can log in to your Support Hub to see your recommended legal professionals. Take the Q&A if you don’t have a personal Support Hub yet.

Plan realistic timeframes

Asset division and the sale of assets can take time. Give yourself a realistic timeframe, so you have clarity on your needs and confidence that you can cover costs during the waiting period. Family law finance can help you cover professional fees until you reach a settlement, which takes some of the financial pressure off during this time.

Create a new financial roadmap

Fear of the unknown is a significant source of stress. Work with a knowledgeable professional to map your financial future and alleviate money-related fears. A financial advisor can help you with long-term investments and goals, and a financial coach can help if you struggle to manage bills and debt.

Addressing your financial situation early on can positively impact your mental and physical health. Seek guidance from professionals specialising in separation and divorce to help you navigate this challenging period.

By preparing your finances and engaging in open communication, you can minimise conflicts and ensure a smoother transition to your new life.

The Separation Guide aims to make separation and divorce simpler, more manageable and less stressful. To find out more about how one of our Network Members could support your separation, take our free 3-minute Q&A.

The information in our resources is general only. Consider getting in touch with a professional adviser if you need support with your legal, financial or wellbeing needs.