Women face many financial disadvantages when they divorce or separate. So, here are some questions you should ask yourself and ways to minimise the financial impact of divorce.
Divorce is a stressful time for everyone involved and it has a big impact on future financial wellbeing for women and men. The Canberra University study found that divorced women are worse off financially than divorced men or their married female counterparts.
The financial disadvantages facing divorced or separated women
Divorced women earn less, are less likely to have home ownership, are more likely to carry non-property debt and have up to 75% less superannuation. 40% of divorced mothers are still living in rental accommodation five years after divorce, and single women over age 50 are the fastest growing demographic of the homeless.
What you can do to minimise the financial impact of divorce or separation
It is important for women to plan their finances when they are faced with separation and preferably get on top of the family finances well before that. Taking control of money, knowing where money is being spent, and making conscious decisions about spending and saving is the cornerstone to financial wellbeing.
Figure out how you can support yourself financially
MoneySmart has some great tips and tools for budgeting. If you are separating, complete a budget so that you know what you need to support your lifestyle. If necessary, identify items you can cut out or put off until you are back on your feet. Think of ways you can fill any income gaps; for example, better paid work, starting a business from home, taking in a boarder, Centrelink payments.
Understand how your divorce or separation can affect your kids
If you have kids, it is likely that the dreams and ambitions you have for them won’t change because you are separating. List what it costs to give them the life you both want for them, so you can negotiate appropriate child support payments.
Should you keep the house after divorce?
Do some research about the cost of homeownership or a rental property in the area you wish to live. Have a plan for what you are going to need to set up your new life. While it can seem like a good idea to keep the family home, if you can’t meet mortgage payments or afford the running and maintenance costs, this may not be the best outcome for you.
Make sure to have copies of all your financial and personal information
Collect as much information about the family’s financial affairs as you can while you are still living together. This includes bank statements, share dividend notices, managed fund statements, superannuation statements, company and trust financial accounts, and insurance policies. This will help you get a picture of what you and your ex own and owe, and what there will be to share.
Be realistic about how much of the pie you will get; the settlement needs to be fair for you both.
“Taking control of money, knowing where money is being spent, and making conscious decisions about spending and saving is the cornerstone to financial wellbeing.”
Know the importance of superannuation in divorce or separation
Superannuation is now often the 2nd largest marital asset and it can be shared as part of the property settlement. Even if you don’t have much superannuation yourself, spend some time reading and learning about it on the MoneySmart website.
Getting a share of the superannuation can help provide longer-term financial security and ensure you have money to live on when you retire.
Don’t be afraid to ask for help during this time
The world of money and finance can seem mysterious and scary if you have not handled the family finances. Find someone who can help you through the maze of money and divorce and build your confidence to give you the best chance of negotiating a property settlement that will work for you. I’ve worked with hundreds of women going through separation and divorce, and delight in seeing them grow in confidence and take charge of their financial lives.
The process you and your ex use to negotiate your settlement will be the biggest factor in how much you will spend and how much you will have left for your new life. This is a big topic but my number 1 tip to preserve your wealth is to stay away from the Family Court and adversarial negotiations between lawyers.