With financial pressures mounting in every area of life during Coronavirus pandemic it is likely this could be causing a strain on your relationship too. If you do find your relationship has hit the end of the road it opens the complicated task of separating your finances from one another. Although you might start out negotiations with the best intentions it’s easy for the conversation to get heated and for emotions to take over, especially given the current market environment and fear of the unknown.
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Stress is a completely normal part of separation and will be experienced differently for each person involved. Stemming from fear of the unknown, anxiety about your future, potential surprise or shock surrounding the separation; the emotions that come with separation are also intertwined with finances. Understanding your particular sources of financial stress can help you navigate your way through the separation journey.
Things to consider include:
Money is a top cause of stress, and long term stress has incredibly negative impacts on your mental and physical health. The sooner you can get your financial situations out on the table and professional support to navigate the options, the better off you will be.
We are proudly partnered with The Separation Guide who can help guide you through the complete separation process, they also advocate for couples to find a way through separation without forcing each other into the courts, potentially saving them both from additional scrutiny and cost.
Money is one of those taboo subjects that can be hard to discuss openly. Every relationship manages their finances differently, and it is common for there to be financial blind spots between partners. By outlining what each of you would like to achieve from your money conversation you can set yourselves up well for a full and frank discussion. It may also help to set an agenda following the outlined headings below (your goals, understand your financial picture, what to do with assets).
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It may seem simple but taking the time to properly understand your new goals and your former partner’s new goal are, you can begin to understand what is going to be most important to each other. This is particularly important when separating as it may the first time in years or even decades that you’ve had to think about your own goals and not your goals as a couple. Each of you should consider your own goals and then use it as a discussion point moving forward. This may help you identify your potential living expenses, areas to compromise and so on.
You can use our goals worksheet here.
By deep-diving into your finances, you will be able to gain a clear picture of what your current financial position is. The best way to start this is by creating a budget, this will help identify income streams, expenses and liabilities and it may also highlight some joint fees and services you no longer need now that you are separating. Creating a budget is also a necessary tool for splitting finances and this document will often be required when seeking advice or legal proceedings.
You can use our free budget planner here.
You may also find our simple guide to budgeting useful.
Now you have a better understanding of your goals and financial position the decision around what to do with your assets may be a little clearer. This is often where we see conversations start to get most heated. You may start to bargain with one another, and tension can begin to rise. We recommend seeking the advice of various professionals or using a mediator to manage the conversation if you can’t reach an amicable agreement.
Assets that can be divided include:
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Separating from a partner can be an emotionally draining and stressful time at the best of times, but the current pandemic only compounds those issues. Many Australians are finding themselves out of work for the first time. Others are fearful of what may come.
If you do find yourself facing financial hardship during this time it’s important to understand what benefits are currently available to you as a couple and or individual. This will give you an action plan and some clarity around your position and what you should do next.
You can download our financial hardship action plan here.
Depending on the stage of your separation you may need to apply as a couple or individual.
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Given the current market, you may have new concerns about whether now is a good time to pull out of an investment. Whether you are invested in shares, property or superannuation, the current market may have seen the reported value of your investment temporarily dip and as a result have you considering if you should delay sales and finalising separation until things recover. Depending on how amicable the separation is this may or may not be an option, especially if doing so could be further harming your emotional and mental health. We can also never time the market which means you do not know exactly how long you will be waiting for. There is also no guarantee the market won’t drop further. Although we would all like to perfectly time the market there is never really a perfect time to pull out, you need to consider your personal needs and take your circumstances into account. If you are exiting investment and then reinvesting at the same time, the market position becomes less important as you are selling and buying at similar rates.
The other main asset for most couples is their home. Property prices are predicted to decrease, and again, if you are selling and buying in the same market it is less of an issue. This will become more problematic if you are selling now and then need a long period of time to buy back in. It is worth discussing your options with an adviser to understand how to make the best choice for you.
If this is something you are considering we highly recommend seeking the advice of a professional such as Financial Adviser who will help you make informed decisions based on your own circumstances and needs.
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You may already have an adviser or are considering seeing a financial adviser for the first time. An adviser will be able to see your entire financial picture, get to understand you, help you clarify and prioritise your goals and provide you with a structured plan on how to manage your finances moving forward. Once you are separated, they can also help on your journey towards reaching your new goals and dreams.
Divorce is an emotionally draining experience and it is extremely important that people are seeking the right assistance from a number of different professionals. Financial Advice, Legal Advice, Accounting Advice & even Psychological Counselling are important steps to ensuring that divorcees navigate appropriately through a plethora of issues and bring some sort of normality and clarity to their new life.
In recent experience with clients who are filing for divorce we have been able to separate their accounts and introduce another Invest Blue Adviser to take on the spouse file. This avoids any conflict and brings impartiality to the scenario. – Ben Warren
An adviser can also:
You may be interested in our article: face to face with financial advice – the first meeting
Separating isn’t easy in the best of times, let alone amidst the uncertainty of a pandemic.
By simply starting with a conversation, exploring your goals and dreams, creating a budget and understand your joint finances you will be able to better prepare your finances for separation. Seeking the advice of a professional to guide you through this process can help minimise the stress and give you a holistic overview of your exact financial position and may help you move through this journey with more ease and peace of mind and ensure any financial decisions are in your best interest and align with your goals and dreams.
If you would like to discuss your options with one of our advisers, you can book a complimentary initial consultation here.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
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