The end of a relationship is a tough time for anyone, but it can be much tougher if there are financial issues to deal with as well. The best way to protect your money is to know exactly where you stand.
That’s why whenever we’ve been in the unfortunate situation of having to console a friend whose relationship is on the rocks, we also gently remind them to get their finances in order as soon as possible.
That’s right… even before breaking out the tissue box.
Why? Well, we’ve seen what can happen if these issues aren’t knocked on the head early. In some cases a couple may have to let the courts decide how their assets are split up. This not only takes time, but it prolongs the healing process considerably and can send you broke while you’re waiting to sort it out.
And while money is the last thing anyone wants to think about when a relationship ends, the fact is it’s hugely important for each partner’s future. This is particularly true if you have kids or a house together; or if the relationship is financially one-sided and one partner earns significantly more than the other.
So here are seven things you must do immediately to protect your money and secure your financial position when your partner walks out… Then you can get emotional.
WATCH: More good advice to protect your money when your relationship ends:
1. Cancel joint accounts and credit cards
First things first, limit any immediate fallout by taking your money out of joint accounts, cancelling any common credit cards and making sure your pay goes into a your own, rather than joint, account.
This is a simple way to protect yourself against the possibility that your partner does something silly in the heat of the moment.
Also, note the date that you do this, as in Australia you are only able to apply for a formal divorce after being separated for 12 months.
2. Locate all of your financial records
Next, it’s time to get on top of your financial situation. This means digging through your filing cabinet (and email account) and getting a full picture of your financial situation.
We’re talking bank accounts, credit cards, share holdings, super statements and details of all the debts and assets held both jointly and separately.
Ring your accountant, financial planner and bank to make sure you have a copy of everything. The best way to protect your money during divorce is to know exactly where you stand.
3. Engage a lawyer
Unwinding a financial marriage can be a complex legal process, particularly if your finances are complicated. A lawyer can help you separate jointly held assets and protect you in the event that any of the family assets are not in your name.
They’ll also be a great source of guidance in terms of what to do financially, which will give you peace of mind that you’re on top of things.
4. Do up a new budget
Going it alone means you’ll need to adjust to living on a single income, which makes having a budget more important than ever.
First, draw up a list of all of your assets and debts to get a picture of your financial position. Then list all of your income and expenses to see where you stand and any changes you need to make.
This will help too: 10 killer budgeting strategies
5. Review your super and insurance
After a separation, remember the insurance cover you have in place (whether a standalone policy or within super) may no longer be suitable for your situation.
So take the time to review for superannuation, and speak to an adviser if necessary.
Don’t forget to update the beneficiary for any insurance policies. Update your super fund too, if it’s currently your former partner.
6. Update your will
A will lets you control what happens to your assets when you die, so it’s important to update it after a separation.
Your lawyer will be able to assist you during this process and make sure you get it right.
7. Don’t go it alone
Finally, after a separation it’s normal to feel isolated and alone. Don’t be afraid to reach out to friends and family for help.
A trusted confidant can be a great source of support and guidance. They can help you get things back on track as quickly as possible.