Divorce or separation can change almost every part of your financial life at once. Income may need to support two households, joint accounts and debts may need to be separated, superannuation can form part of a property settlement and financial goals that were built as a couple may need to be reconsidered.
It can help to work through the changes in stages rather than trying to solve everything immediately.
Start by Understanding What You Own and Owe
Create a clear list of bank accounts, property, investments, superannuation, credit cards, personal loans, mortgages and other financial commitments.
ASIC’s Moneysmart recommends gathering financial documents early and recording assets and liabilities. Its divorce and separation checklist covers the key financial tasks to work through.
Separate Day-to-Day Finances Carefully
You may need to review joint bank accounts, direct debits, credit cards, utility accounts and online access. Moneysmart suggests opening an account in your own name where appropriate and reviewing shared accounts and cards.
Do not make assumptions about legal ownership or property settlement outcomes. Legal advice is important where assets, debts or property rights are involved.
Build a New Household Budget
Separation often changes both income and expenses. Housing costs, childcare, transport and debt repayments may all look different.
A new budget can help you understand what is affordable now and which financial goals may need to be delayed or adjusted.
Review Debt and the Mortgage
Joint debt can remain a financial risk until it is formally resolved. If you have a mortgage, contact the lender early to understand how repayments will be managed while property arrangements are being worked through.
Moneysmart notes that separation can affect mortgage arrangements before a property settlement is finalised. Its guidance outlines practical steps for separating finances.
Do Not Forget Superannuation
Super may be one of the largest assets in the relationship. It can form part of a property settlement, and beneficiary nominations may also need to be reviewed.
Financial advice can help with your future super strategy, while legal advice is needed for the legal treatment and division of assets.
Review Insurance and Estate Planning
Life insurance, income protection, Wills, powers of attorney and beneficiary nominations may no longer reflect what you want after a separation.
Reviewing these arrangements can be an important part of rebuilding your financial structure.
Rebuild Your Financial Goals
Your longer-term plan may now need to be based on one income, a different housing strategy or a new retirement target. The objective is not to recreate the old plan. It is to build a strategy that reflects your new circumstances. Your circumstances and relationship situation may change again and it is useful to have a financial adviser, who knows you and your financial circumstances.
If you want a clearer picture of your finances after a major life change, complete the Setch Group Financial Healthcheck.
Frequently Asked Questions
Should I close joint bank accounts immediately?
The right approach depends on your circumstances and any legal arrangements. Review access and get legal advice where necessary before making major changes.
Can super be divided after separation?
Super can form part of a property settlement. A family lawyer can explain how the rules apply to your situation.
When should I create a new financial plan?
It can be useful once you have enough clarity about your new income, expenses, assets and obligations to begin planning forward.
This article contains general information only and is not financial advice.
