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Listen: Financial Empowerment

  • Summary
  • Transcript

Angela Harbinson, CEO of The Separation Guide, sat down with Network Members Kylie Harding from Morgans Financial and Selena James from Future Family Law to talk about financial empowerment before, during and after separation.

They discussed;

  • How to avoid emotionally driven financial decisions
  • Steps you can take to help understand your financial situation
  • Tips to help you strengthen your wealth over the long term
  • Importance of properly understanding what is in your ‘asset pool‘ including your liabilities
  • A checklist to guide you in the right direction
  • Your family’s second biggest asset is superannuation and this should always be considered
  • Financial abuse and how you can set new financial goals post-separation.

Listen to the full discussion here.

Note that Kylie Harding was known by her married name Kylie Macdonald when our podcast was recorded.

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.

Disclaimer
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.

 

Angela Harbinson:

In the spirit of reconciliation, The Separation Guide acknowledges the traditional custodians of the country throughout Australia and their connections to land, sea and community. We pay our respect to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islanders peoples today. Making the decision to separate your from your partner is a daunting step for many women, particularly when there are children involved.

 

Angela Harbinson:

While women worldwide are working towards equality, many studies report that mothers are still much more likely than fathers to experience significant career interruptions in order to attend to their family needs. So what happens when separation occurs? And what do women and men need to know about their separation and how can they be financially empowered to ensure that financial needs are met after the divorce? That’s what we’ll be talking about today. Financial empowerment before, during and after separation.

 

Angela Harbinson:

I’m Angela Harbinson, CEO and Co-Founder of The Separation Guide. In 2019, we launched an online guide for separation and divorce with an aim to be a starting point for a better separation. We’ve now helped over 100,000 people who have accessed the site for support and guidance. For those of you who have not familiar with The Separation Guide, the website includes videos, blogs, and other helpful resources just like this podcast to guide you on your legal, financial, and wellbeing throughout your separation.

 

Angela Harbinson:

And don’t worry, you don’t have to be a lawyer to understand it. We’ve also grown a national network of other like-minded people, such as the two ladies I have with me here today. I welcome our network members, Kylie Macdonald from Morgans Financial in New South Wales and Selena James from Future Family Law in Brisbane. Now Kylie Macdonald is a Principal Investment Advisor at Morgans Financial and has nearly 30 years of experience in the financial services sector.

 

Angela Harbinson:

Now Kylie, I hope you don’t mind me mentioning this, but she herself has actually been through a divorce and really understands what a difficult time it can be. Now Kylie works with both individuals and corporate clients and has expertise in direct equity, investment and wealth management. In a nutshell, she’s able to help you understand what you need to survive and provide options for how to invest your money after the separation is finalized.

 

Angela Harbinson:

Selena James is a lawyer and Practice Director with Future Family Law in north Brisbane. Selena has recently completed her graduate diploma of Family Dispute Resolution and has worked in family law for matters all across Australia. She has experience in pre and postnuptial financial agreements in family law. And I’m also very pleased to report that she will be taking mediation bookings with the separation guide in the new year. Today, we’re discussing the very important topic of financial empowerment.

 

Angela Harbinson:

Now just a note to our listeners while we’re using the words woman and mother in today’s podcast, we do acknowledge that families take many forms and there are parents affected by the issues we are discussing who aren’t women. The information contained in this podcast is relevant to any person going through separation who may have interrupted their career and earning capacity to take on that primary caregiving role. So let’s start at the beginning.

 

Angela Harbinson:

Our data tells us there are a lot of people out there who are thinking about separating right now. So Kylie, can I ask you, if we start from the perspective of a mother facing separation, what do you think are the most important consideration she should know when it comes to her finances?

 

Kylie Macdonald:

Thanks Angela. Well, obviously it’s a really emotional time for all and easier said than done. However, it’s really, really important to try and separate the financial from the emotional and child custody if applicable. There are lots of questions to ask yourself, and this is where a professional advisor can assist questions like who will keep up the debt repayments, how will shared debts be divided?

 

Kylie Macdonald:

If you have kids, how will the financial costs of their upkeep be split? Things like will formal child support be necessary? If so, how much? And at what intervals? Who will cover house-related payments, mortgage payments, utility payments? How will your joint savings be divided? How will you deal with tax? It’s really, really important to do a financial stock take and list all of your assets including home, car, superannuation investments and joint debt, having this information compiled in a central point and agreed to by the both of you will really assist when you engage mediators and or lawyers in the future.

 

Angela Harbinson:

Thanks Kylie. So Selena, what do you think about what Kylie said there? There’s a lot to think about from that financial side. How could you help with that?

 

Selena James:

I think just by taking away the overwhelm, the points that Kylie has made are just so accurate as to what needs to be dealt with when you’re separating from your partner, and just acknowledging that there is a lot there, it can be very, very overwhelming, but the whole idea of getting some legal advice and getting legal and financial advice early can really help to break all of that down into bite size chunks. So part of what we do as lawyers or what good family lawyers will do is create a little homework list.

 

Selena James:

So we help people identify what’s important and what order do we need to deal with it? Because all of those things don’t need to be dealt with in that very first week after you separate. So it’s all about compartmentalizing and putting things into bite size pieces, but yeah, really important to get that advice early or even if you’ve got the luxury of getting that advice when you’re just thinking about or contemplating the separation as well.

 

Angela Harbinson:

Absolutely. And I really agree with you on bite size chunks. It’s such an emotional and overwhelming time for people just to be able to think of the next one thing that you need to do. I think that’s really, really great advice. So what if you have been someone who may have been caring for children for a number of years and you’ve maybe stepped away from your career and therefore your earning capacity has changed, what should you use to ensure that your financial future is set after the separation?

 

Selena James:

So that once again gets back to getting legal advice early. So we can set you on the path to an amicable separation and we can have a look at what’s there. It’s really important for me to help my clients understand how their financial situation works and then what it might look like in the event of separation. So lawyers should be sitting down and running through all that with their clients, and it doesn’t need to be something that’s completely overwhelming.

 

Selena James:

The idea is to try and break it down and explain it so that it’s all easy to understand, in plain English, and then we develop a strategy as to how we can best get the settlement sorted in a way that they can hopefully have enough funds to move on and be financially independent in their future.

 

Angela Harbinson:

Yeah, absolutely. And I think a lot of it, it really does come back to understanding what is in that asset pool, or it’s called a pool of assets. It’s a term that not many people would be really familiar with, but really understanding what all those things are. Kylie, how can the financial advisor benefit a woman early on in the separation process?

 

Kylie Macdonald:

When you’re facing separation or divorce Angela, you want to ensure that you can maintain the lifestyle that you’re used to while also strengthening your wealth over the long-term. With professional help, you’ll be in a better position to do both of these things. We provide objectivity, we assist to make sense of things when they are just too overwhelming and we make clients aware of their options. We also help to avoid emotionally driven decisions by introducing clear, researched and considered options for clients and for couples that are going through this difficult period.

 

Angela Harbinson:

I was just going to say that is such a good point about the emotionally driven decisions. Just giving yourself a little bit of time to pause and stop before jumping in.

 

Kylie Macdonald:

Yeah, there’s lots of benefits. We can help clarify the current financial position, prioritize what your financial goals and life goals are as an independent person. Make sure that your choices about your financial life are in line with your personal values when they might not have been when you were part of a couple. It’s also really important to get some coaching and knowledge around financial literacy. And that’s something that is really important that an advisor assists with.

 

Kylie Macdonald:

We help set new financial goals. We look at superannuation and your retirement savings, and we see what’s there. And we help give clarity about what the future might look like and clarity around your options, financial options like buying versus renting and all of those types of things. So yeah, there is a lot, and as you said, work through them one by one, but when you’ve got someone holding your hand through the process and assisting you with it, it really does make things a lot easier.

 

Angela Harbinson:

Yeah. I’ve heard a lot of people talk about the emotional connection to the family home and quite often put their hands up. So I just want the family home, that’s all I want. I’d be interested to hear from each of you, or maybe Selena, you could talk on this one. How common is it that women come in with an idea in their mind of what they want in the separation?

 

Selena James:

Really common actually. I think there’s an element of sentimental attachment that goes with the family home and also a sense of security and not having to deal with big changes, but as Kylie pointed out, sometimes keeping that family home is not going to be the best financial decision for their future. And it’s sometimes about making sure that they’re not getting caught up in the emotional side of things and getting the right advice so that they can set up their post-separation finances in a way that’s going to work best for them, and that’s really, really common to hear, “I’ve just got to keep the house. I don’t want the superannuation.”

 

Selena James:

And they’re really forgetting about their financial future because you can almost guarantee that when they go to retire, they’re going to regret that decision to let the super go. And certainly as lawyers in the courts, if they’re making a decision even though we’re trying with that process if we can, are going to want to balance out the immediate needs with the long-term needs. So that’s why lawyers can work with financial planners and clients all together to try and strategize, “Well, how can we make this asset pool work best for that particular person and be a bit future-focused?” So dealing with the immediate needs as well as their future needs.

 

Angela Harbinson:

Absolutely. You made a really good point around superannuation, and I think you might have participated in my little spot poll to our network members across the country about this. Superannuation is one that a lot of people are not aware of, and that’s the reason we put it into the Q&A as a little popup to remind people that superannuation is part of that asset rule.

 

Angela Harbinson:

And our network members reported that in cases as up on average, 75% of matters actually include a split of superannuation, but there is a huge number of people out there that probably are not aware of it and are giving that money away essentially, particularly when there are, I guess women that as we’ve said earlier, have been out of the career for a period of time caring for children.

 

Selena James:

And I think the difficulty there with superannuation sometimes Angela is that if the pool only has superannuation, if there’s not any significant tangible assets like a home or significant shares or other assets that can be divided up, it then almost gets put into the two hard basket. If one party has got all of the superannuation and there’s nothing to allow the person that doesn’t have super to actually get some of that because they’ll have to spend cash that they effectively don’t have to get an order to get the split for their super.

 

Selena James:

So I do think it gets parked, but it’s a really important one that separated parties need to give consideration because there’s obviously time limits that apply to property settlements which mean that you could be giving away your retirement future.

 

Angela Harbinson:

Yeah, it really is a matter of sitting down as you say with a financial expert and really doing the sums of what is the value of the house and what is the value of outcome supers and how can that be? What is the best thing for your future? So Kylie, I guess we talk about things before you separate. So things that you might want to do before you actually make that move of saying, “Okay, I think it’s time for us to move on.”

 

Angela Harbinson:

What about when you have actually separated and let’s say you’ve moved into separate houses and you’re in that period where it may be a temporary thing, or it may be a permanent thing. What steps can someone who’s not really had an active role in organizing joint finances take to understand all the assets and debts that may be in their name? How can someone challenge a debt for instance that may be in their name?

 

Selena James:

It’s a really important consideration Angela that particular issue. From a legal perspective, I often get clients to quite early in the piece go and have a talk to their bank. So for example, if there’s accounts that are structured in a way that they’ve got joint authority, the bank’s got to give copies of statements. So making an appointment with your bank manager, or even just a clerk of the bank, they can sit down and go through and just explain what’s been set up and what control and authority you’ve got, and you can get copies of statements and whatnot which can be emailed or printed off for you.

 

Selena James:

The other really important resource is myGov. myGov you’ve got access to your Centrelink, your child support, your ATO records which means you can get access to your tax returns, you can get access to your superannuation balances. So if you’re not sure where to start or what you might have, your bank and your myGov account will have some really quick links as to what you might have in your actual control. I know we’re very much electronic these days.

 

Selena James:

It used to be a case of we’ll go to the filing cabinet and just start fishing through and seeing what you can get copies of because it might be relevant, it might be, it might not be, but trying to get an understanding of what’s actually there, you’ve got to be a little bit of an investigator to try and figure out what’s happening. Another important piece of information that can help if you’re not privy to the financial, in the relationship is to find something that’s got the accountant or the financial planner’s name and address details on there because that can then lead us down the path of figuring out who we need to ask information from.

 

Selena James:

There’s also searches that you can do fairly cheap as well. You can do an ASIC search by name to figure out what entities might be in the control of a person and that’s important quite often for both parties because it’s not uncommon for example, a wife to be made a director or secretary or shareholder of a company, but they’ve got no involvement or understanding in it. So it’s about figuring out what’s been created by the person controlling the finances, and then getting an understanding of what’s actually happening and getting copies of the relevant documents because that’s all part of your disclosure process that we go through to figure out what’s in the property pool. So with the debts, I think you said if there was a challenge to the debt.

 

Angela Harbinson:

Challenging the debt that might be in their name?

 

Selena James:

So that depends on what the allegation is. So if it’s a case that you found a debt that’s in your name and you know you didn’t sign any paperwork and you think it might be fraudulently obtained, that’s something that you’d have to take to the police. But what I would suggest is get some legal advice on it first, but just generally, if you know you’ve got these debts, they’re just in your sole name so you know you’ve got that legal responsibility for them.

 

Selena James:

There is some reassurance in knowing that debts, as well as assets are included in the property pool when we’re looking at a final property settlement. So certainly if there is some assets or resources available that could pay out that debt in final property settlement, that’s something that would explore when you’re working out your final settlement terms and we would work out where that is in priority and how we can actually pay it out or restructure it so that it’s manageable for a party.

 

Selena James:

The other thing I often suggest to clients is if that debt’s creating a real problem because they can’t afford to service it because they’ve been cut off from the family income or something, talk to the bank or the financier because there’s often hardship applications or payment arrangements that can be put in place if you let them know that you’re going through a separation and your financial circumstances have changed.

 

Selena James:

And it’s usually you get a better outcome from financiers about management of debts if you don’t let it go well into arrears, as opposed to you just stop the payments because you’re too embarrassed or worried what might happen to your credit rating. It’s easier to sort it out at the start than it is to unravel it when you’ve got thousands and thousands of dollars worth of arrears and penalties wrapped up.

 

Angela Harbinson:

Yeah, that’s for great advice, great advice. So Selena, can you explain some of the options for families wanting to reach a financial agreement?

 

Selena James:

Yeah, so there’s lots of different ways. Obviously, we’ve got the separation guide which is a great step for families that want to get an initial idea of an amicable settlement that they can do themselves. And there’s some great referrals that can happen as part of that process as well. Legal advice and generally the way we try and … Well, I know the way that I practice is to try and keep parties out of court as much as possible.

 

Selena James:

It’s never a good outcome on an emotional or financial level if we end up in the court process, but unfortunately, sometimes it’s necessary for parties. The big thing is getting organized. So getting together your disclosure and the information about your financial circumstances, your assets and your liabilities and your resources. So getting all of that together, that’s part of what your lawyer is going to need to give you advice and you can keep your costs down if you’re super organized with all of that.

 

Selena James:

With negotiations, it’s really got to be an assessment of the conflict and who we’re dealing with not only in terms of the other party, but often their representation can be a big factor as to how things are resolved. In some circumstances, you’ve got two really settlement-focused lawyers that can get on the phone, have a couple of, without prejudice calls and resolve it, and then we document it and it’s done really easily. I try not to get into correspondence warfare as I call it where there’s just lots of letters going backwards and forward.

Selena James:

It’s generally more efficient if we can get parties to a mediation. Mediation is the process where you’ve got someone impartial and qualified to assist parties in their representatives if they choose to be represented with the goal of negotiating a settlement that both parties can live with. And that’s usually your most effective way to get a resolution of matters. And if mediation fails, then it might be that it might need some court intervention or there might be some legal complexities that force it into the court process, but most matters can actually resolve without the need to go to court.

 

Angela Harbinson:

Yeah, and that’s certainly what we’re seeing from the feedback from our network members and certainly people going through the Q&A on the separation guide site. The majority of people are actually quite they’re triaged through the questions are actually really suitable for mediation which is a much more cost effective way of going about it, isn’t it?

 

Selena James:

Definitely.

 

Angela Harbinson:

Yeah, great. This one, I guess, is for you Selena as well. The costs of separating, everyone and reads these stories about how expensive legal fees are. And generally it’s an unplanned expense. It’s not something you’ve been saving up for, for a long time. What services or tools are out there that you can suggest for separating women that they might be able to look into to help keep their costs down?

 

Selena James:

I actually use a company called Plenti finance and I just want to say I’m not getting any kickbacks from them, but they’re a specialist, family law litigation lender. And the benefit of that service is if there’s not financial resources, cash resources, or something that’s available for parties to use towards their legal fees, Plenti can actually provide them with a product so they approve a certain amount for a loan which the lawyer then sends their invoices and the client approves it and they only pay interest on what’s actually drawn down and there are no repayments until the final settlement comes through.

 

Selena James:

So it is a property settlement specific product, but it’s been really valuable for example where you might have someone who’s got a good income and got control of most of the assets and resources in their name, but there’s a definite claim for the other party who doesn’t have those same resources. It just balances the power because all of a sudden, they’ve got this ability to get good representation and pay that.

 

Selena James:

And a good lawyer is going to always do a cost-benefit analysis. So for me, it’s really important for every client to sit down with them and go, “Okay, well, this is what your potential range of settlement is likely to be. This is what your cost range is going to be to actually get an outcome.” And I’ll just tell them at the outset, yes, we can help, but it’s going to potentially cost you more in legal fees. So I wouldn’t recommend you go down that path or it might be that you might spend this, you’ll get this potential range, so it could be viable or it could be, yeah, this is going to be a good return on investment.

 

Selena James:

It’s going to cost you this amount for legals, but we can say that you’re definitely going to get this specific range. So it’s worth your while. If your lawyer is not doing that at the outset or early in proceedings with you, you’ve got to wonder what’s going on and it should be happening regularly throughout the advice as well. We should always be checking in and making sure that parties are just not paying for legal advice for the sake of getting legal advice.

 

Selena James:

We don’t want them in a position where they’ve got this outcome, they’ve had a win per se, but then all the money they get goes to the lawyers. There’s just no point in doing that, it gives us lawyers a bad name. So just be mindful of all of that. In terms of immediate assistance, I know Centrelink can provide some emergency funding. I know there’s a new package, I suppose you call it for domestic violence assistance if you need to get out quite quickly and I think it’s a $5,000 grant to assist with the rental bond or emergency accommodation and whatnot.

 

Selena James:

So there’s things like that. Also, a lot of your banks if you go and talk to them about your circumstances, sometimes they can actually have products that can assist like personal loans or credit cards that might help with emergency immediate funding. And those debts will be taken into account in any final property settlement as well. So yeah, there’s a few different ways that you can fund things, but I think the really important point is obviously if you can get fixed fees from your lawyer and definitely fee transparency and that cost benefit analysis that’s regularly occurring so that you can actually weigh up.

 

Selena James:

Well, is it worth taking this path? And often there’ll be a few different paths that we can take to manage a matter and they have different cost structures. So just being nice and transparent so that you can make an informed decision about which way you go with things and what battles you pick to fight.

 

Angela Harbinson:

That’s right, that’s right. And that’s as you know, Selena is a big part about the network that we’ve created at the separation guide is about trying to find more like-minded lawyers like you who have that same ethos. And we are looking a lot of our members have fixed price and transparent fees. And that’s a big part of keeping costs down for people and giving people that reassurance when they go in because most people aren’t speaking to a lawyer every day, it’s the first thing, the first time they’ve maybe experienced it and it can feel a bit daunting at times.

Selena James:

Yeah. And I think that first meeting with a lawyer should always be obligation-free. I know I spoke to a client only recently and they said, “Oh, there was a lot of pressure. I’ve actually paid a retainer to another law firm because I felt pressured to actually do that.” But I said, “You should never feel pressured to retain someone. You should be comfortable with the advice in the person that you’re actually working with. You shouldn’t ever feel like you’ve … It’s normal to have a policy of money and trust upfront and whatnot for private practitioners, but there should never be pressured to engage.”

 

Selena James:

That’s a mutual working relationship of trust so it’s starting with you have to sign this and you have to do it in this timeframe and you have to put money in. It’s probably not getting off on the right foot and it might be that you need to broaden your scope of who’s actually going to be working for you.

 

Angela Harbinson:

Absolutely. Kylie, I’m going to throw to you now. What things should women try to avoid in terms of their finances?

 

Kylie Macdonald:

There are things called payday loans and that’s just essentially a high-interest loan. I would suggest taking on additional debt in your own name should be avoided where possible other things to avoid during separation and divorce which is applicable to both men and women. Obviously, don’t pass on getting legal advice. Don’t rely on advice from friends and family. Everyone’s got a horror story, avoid overspending in this period where you’re trying to sort things out and most importantly, don’t lose sight on what’s best for you and your children if you have them.

 

Angela Harbinson:

Absolutely. Yeah, you are speaking from experience as well. You know some of the things you need to prepare for in a separation. Okay Selena, what would happen if a client came to you and there was evidence that they were maybe a victim of financial abuse? Can you maybe what financial abuse actually is and what it means?

 

Selena James:

Yeah, and I think it’s a really important one in terms of awareness because with family and domestic violence, what I commonly hear is, and when I ask the question of clients, has there been any for family or domestic violence is, “Oh, well, they didn’t hit me.” And it’s so much more than that, and it’s really important that culturally, we start to recognize that family and domestic violence is more than just physical violence.

 

Selena James:

The legislation recognizes it as being more than just physical violence and financial abuse is actually defined in most of the state legislation to include more financial abuse as well. So that can include just to give some examples, controlling, monitoring, or limiting access to finances, asking for passwords for online banking or Centrelink and controlling those accounts, taking control of pensions, benefits, employment income, taking away bank cards, or access to personal accounts, placing all of the assets in, I’ll say the perpetrator’s name and placing all the debts and the victim’s name.

 

Selena James:

So structuring things so that all of the financial risk is placed with one person and all of the rewards, the assets are placed in the abuser’s name and the other thing to look out for is when someone’s being evasive or lying or hiding income or cash resources from the other parties. So there are some key indicators that there might be financial abuse going on.

 

Angela Harbinson:

Yeah, absolutely. I think it’s really important for people to understand what they are because until someone says that you might not even realize that that’s happening to you. We actually do have it-

 

Selena James:

And that’s often the case because you’re given example. If you say family and domestic violence, people think physical, but when you start talking through, or you might be having a conversation with someone and they start explaining this behaviour, or say, “Well, how were the finances managed in the relationship?” And they’ll be going, “Oh well, he just had control of everything and I let him, and I never really got money to spend on clothes or if I did, then he’d go through the bank statements and then I’d get abused because I spent too much money on an item.” Those types of things are red flags for financial abuse.

 

Angela Harbinson:

Yeah, absolutely. We actually have another podcast in our series which is on that very topic. So please, if this is something that you are listening to and experiencing, jump onto that one, there’s some really wonderful advice on there. Let’s move on now Kylie, and talk a bit to you about budgeting. If you’re not a really great budgeter, what’s some advice that you might give for women on how to prepare and what things they should put in their budget?

 

Kylie Macdonald:

Yeah, before a divorce settlement Angela, you really need to have an idea of your past and future expenses. This will obviously help you create a realistic financial goal. When I’m working with clients who are going through this process, I use a worksheet to visualize and calculate past and expected monthly outlay. The areas to consider include house and land, transport, insurance, money, technology, personal needs and lifestyle and kid-related expenses.

 

Kylie Macdonald:

Mapping out your budget is crucial as you aim for the divorce settlements that you want. You need to set aside your emotions and what’s happened in the past, focus on the current and start planning your future. Obviously, for those financially unable to engage a financial advisor in this process, there is lots and lots of free resources online.

Angela Harbinson:

For those that are looking for some information about financial advice, pop onto theseparationguide.com.au website. And there are a few free resources that you can access from there. Kylie, what sort of things should women make sure they are across? How do they plan for their future?

 

Kylie Macdonald:

Really the number one thing that women are concerned about when they chat to me in the process of separation and divorce is their financial security and independence. They really want clarity around whether or not they’re going to have enough to get by on their own. And women obviously are especially vulnerable because often they have not had the income or don’t have the superannuation that perhaps their part they may have accrued during the time of bringing up children.

 

Kylie Macdonald:

Forbes wrote a really good article recently about the six nasty surprises that women often encounter during this process. They were things like they were unaware of the total size of the marital debt like home loan, lines of credit, auto financing, credit cards, that type of thing not anticipating that they would maybe have to return to the workforce after spending many years raising the children.

 

Kylie Macdonald:

The assumption is that child support would be higher or lasts for a lot longer. And also the assumption which we’ve touched on that they would be able to keep the marital home. Staggering costs of insurance and underestimating the costs of get a divorce. So yeah, lots of things to think about and applicable to both males and females.

 

Angela Harbinson:

Yeah, absolutely. There are so many things you really need to be aware of on there. It’s I guess shows the importance of getting the right advice and making sure you’re across it. What are some of the main financial goals that you notice people have when divorcing Kylie?

 

Kylie Macdonald:

Budgeting is super important. You’ve got a budget for your new circumstances. Perhaps people don’t realize the importance of that. We have spoken about those costs that they were just used to being paid that they now are going to have to find the funds for. So we talk with clients going through this about an income plan to try and improve their cash flow and strategies for efficient use of the income that they do have.

 

Kylie Macdonald:

And then any surplus income that they’ve got, we then use that to create wealth and create a nest egg for their future, determining your debt needs, how much you can borrow. I personally had an issue with the banks. They look very differently on a female who is divorced with many children. And I didn’t realize that this may be the case.

Kylie Macdonald:

So getting a home loan as a divorced female with a family is a lot more difficult when you haven’t got two incomes on that application. So it’s just being aware of things, not perhaps being as easy to get as they were perhaps when you were within a marriage. So you’ve got to know what your debt needs are and how much you can borrow. You’ve got to evaluate the risks, make sure that if you can, you’ve got insurances to cover you should something happen to you in the future to make sure that your kids are looked after.

 

Angela Harbinson:

What kind of insurances do you mean there Kylie? Oh, life insurances and income insurances. So you want to make sure that if something does happen to you as as a single person, and you’ve got dependents, that they’re going to be looked after, and depending on your age, and we are seeing a lot of women in the more advanced stages of life who are approaching retirement. We have to plan for that retirement and make sure that they can achieve what it is that they’re after.

 

Angela Harbinson:

So we look at levels of income needed retirement assets to provide that income and help achieve and sustain the lifestyle that you require. And then of course, there’s estate planning for those in their 60’s and 70’s. You want to make sure that your assets are going to the right people in the right places in the event of your passing. So wills and things like that need to be thought about and changed when you divorce. And that’s something that the lawyers can definitely assist with.

 

Angela Harbinson:

Yeah, absolutely. No, it’s some really great points there and yeah, it’s so true, there are different things you really need to consider at different age brackets in your life. So that’s a great point. Thank you.

 

Selena James:

I think one of the positives that can come out of separation is the ability to potentially restructure your finances because you’re being forced to do it anyway.

 

Angela Harbinson:

Yeah, people do get a bit lazy, finance is something you put to the back of the pile. Sometimes it’s just a set and forget, but that is a good point of having that chance to reevaluate and-

 

Selena James:

Definitely, and it’s something when we’re getting close to a settlement, that’s the point where you’ve got a bit of an idea of where you’re going, and we say, “Look, you go and talk to your financial planner and just make sure this is actually going to work for you if you’re getting these particular assets and this potential cash range and super range.”

 

Selena James:

But the thing that accountants and financial planners can do is look at the way that everything’s going to be structured and there’s sometimes potential to do that better that will work better for the parties. So it’s really important to be collaborative with other experts when you’re getting to that pointy end of your property settlement.

 

Angela Harbinson:

Kylie, this one might be a good one for you. What is the difference between what advice you might get from a financial advisor versus what you might get from an accountant?

 

Kylie Macdonald:

An accountant will assist in giving advice about the potential tax implications of a settlement being finalized. Tax advice is not something that financial planners and advisors tend to give. So an accountant will definitely be able to look at the tax implications of certain decisions before a financial settlement is completed. A planner or an advisor can assist with things like superannuation splitting, retirement planning, projecting what the future looks like once you’ve decided on what the split of the pool is, and just giving some clarity around what the future looks like now that you’re operating as an independent person.

 

Angela Harbinson:

It’s a really important thing to get right and I know speaking with a financial advisor myself once, we set what the future you wanted to have, and then worked backwards from that of what you actually need on a day to day level to get to that point. And I think that would be really useful if you are in that separation process to know what reality looks like in that future and get that good advice upfront before everything is settled. So we touched on retirement and things there as well. Are there any special things that divorce women need to consider to save for retirement and to plan for their future Kylie?

 

Kylie Macdonald:

There’s many things that we take into consideration. As you said, you talk about your goals and objectives with a financial planner. We have to be honest about whether or not those goals and objectives are achievable, but we provide a plan to head in that direction. And it also gives you some clarity around whether or not you think what you would like to occur is actually possible, and we did touch on females often coming into separation and divorce saying, “I just want the house.”

 

Kylie Macdonald:

We sometimes have to have difficult conversations around those types of ideas because often a lot of families equity is tied up in the house. And often, that equity needs to be realized in order for them to have a base to take their futures forward independently.

 

Angela Harbinson:

Yeah, great. Thank you. What other advice or holistic support do you suggest that women should obtain to ultimately reach that financial empowerment?

 

Kylie Macdonald:

I talk to clients about separating the emotional, the kids and the finances. They’re three very different areas, and you’ve got to try, and I know it’s hard, but you’ve got to try and keep them separate from each other. Too many times I’ve seen the children being used in chess pieces for a financial settlement and that makes things really, really tricky for all involved.

Kylie Macdonald:

Get support from a professional for the emotional and definitely the legal. If you’ve got kids, put their needs first and also get assistance with the financial side of things. When you are engaging professionals in these areas, it’s really important that they are a good fit and that they’re nonjudgmental and that they use plain language and that they listen to you. So it may take a couple of tries to find professionals in those areas that you identify with.

Angela Harbinson:

Yeah, great point. I might ask this one Selena of you, what steps can women take when their former partner does not meet their financial obligations such as child support payments?

Selena James:

So child support, the child support agency has quite extensive powers in terms of recovering payments. So my advice generally is that make sure you lodge for your assessment early. And even if you agree initially to have a private arrangement between yourselves, if you find that there’s starting to be a pattern of nonpayment or late payment, sometimes it’s just easier to get the child support agency to collect and monitor things on your behalf.

 

Selena James:

So you don’t pay any extra for them to do that, it just takes the stress and worry away to let the agency manage that for you and then the payments just go into your account. And if they’re missed, they’ll chase up the arrears for you. So with child support, it’s always best in the first instance, let the agency take care of that for you. It can minimize some of the worry and stress that might be sitting there in relation to that one.

 

Selena James:

Sometimes there is the ability to seek a spousal mate. Always best to get some legal advice before you go down that avenue. There’s some complexities with basal maintenance. Unfortunately, it doesn’t have a government-supported agency that will deal with that for you. It does have to go through the court system if it’s not voluntary, but the other important thing is really just getting an understanding of what assets and resources you actually have, and sometimes taking control of that.

 

Selena James:

Get some advice from a lawyer if you are finding that there’s been a bit of controlling behavior happening with the finances and you’re potentially being drip-fed or not getting the support that you need to keep living in the interim period, get some advice around that to see what you can actually do and what your options are. So the first point is to get, find out as much as you can about what you’ve got, and then there might be some action that can be taken to give a bit more financial security with the resources that are already there.

 

Angela Harbinson:

Great, yeah. Great advice. I want to ask you now each individually, what would you say is the biggest piece of advice that you can share with our audience to support them in achieving financial independence?

 

Kylie Macdonald:

Yeah, in marriages, it’s generally seen that a single person take care of every aspect of personal finance and often the other partner does not look seriously at that area. My advice to all women, both married and unmarried is pay attention 100% that the partner who doesn’t pay attention to finances during a marriage typically needs some help to become financially independent after divorce.

 

Kylie Macdonald:

So yeah, 100%, try and get across what is happening, look and read prior to signing anything. And really, you should really have an idea of any assets that are in joint names, any companies and directorships that you hold and ask questions 100%, just pay attention to the finances as best you can.

 

Angela Harbinson:

Yeah, fantastic advice. Fantastic advice. And what about you Selena? What nugget of advice can you leave with people today?

 

Selena James:

I actually had a very similar point to Kylie, and just expanding on that a little bit further. I would just say trust your gut instincts for little red flags when it comes to finances. If something doesn’t feel right, and that might be things like is the other person being really cagey or evasive around financial conversations? If you start asking questions, are they being a bit funny about it, or do they regularly forget their wallet or is there pressure, you’re feeling pressure to do something that just doesn’t feel comfortable for you?

 

Selena James:

Just watch for the red flags and if you’re getting lots of those, get some advice about it. But my key takeaway point really is knowledge is power and you’re never too old to start learning about things or getting new skills or having an understanding of what’s going on. It can feel incredibly daunting and intimidating at first, but I just believe that everyone has that capacity to develop and learn if they’re interested in doing so. And when it’s your financial future, you need to be interested in it. You can’t just sit back and go, “Oh, well, someone will take care of me because they won’t.”

 

Angela Harbinson:

Absolutely. Look, ladies, thank you so much for today. I know it’s been a really wonderful conversation and I know I’ve learned a lot and I’m sure our listeners will as well. Selena James and Kylie Macdonald, thank you very much for joining us today.

Speaker:

Thank you for listening to The Separation Guide Podcast. If you’re thinking about separating, but aren’t sure what steps to take next, take our free five minute Q&A. It explains how divorce and separation work and helps connect you with experts and services to get you through the maze. Just head to theseparationguide.com.au. From podcast to templates, our website also has plenty of free resources to get you started.