9 Common Mistakes Women Make in a Divorce
Nobody gets married with the intention of getting divorced. However, according to the statistics at least 50% of marriages will end in divorce. Divorce is not only stressful, but the effects can also be financially devastating. In this post I want to help you avoid some of the biggest mistakes women make in their divorce settlements.
While I know this can seem like a heavy topic, having seen many clients live with regrets, I’d rather you were fully prepared. Trust me, you don’t want to bury your head in the sand hoping it’ll all sort itself out or blow over, only to find yourself wanting. Below are nine tips to help you stay in control of your financial future.
1. Neglecting your emotional wellbeing
Naturally, the first thing you need to do is surround yourself with family and friends that love you. Having positive emotional and practical support is crucial in helping you cope and adjust to your new life as a singleton or single parent.
2. Starting negotiations without really knowing what you want and need
Lawyers don’t come cheap. So, finding out what assets and money you’ll need before you hire your lawyer, can save you thousands – literally. The last thing you want is for fees to accrue while you negotiate assets and investments that may not suit you, you don’t understand, or worse, have a hefty tax bill!
Before negotiating, always speak to a professional financial adviser. They can help you determine the value of your asset pool and those assets best suited to help you land on your feet.
3. Forgetting the practicalities
- With all the turmoil of divorce, it’s easy to forget to take care of the smaller details. Make sure you cancel any joint credit cards or reduce the limit to avoid any new debt. Remember to close all joint bank accounts and open up your own bank account, preferably with a new institution to avoid confusion.
- If you’re renting, notify your real estate agent as soon as possible.
- Change your super and insurance beneficiaries. This may also be a good time to review your super and insurances to ensure you’re covered sufficiently and can retire the way you had hoped.
- Remember to record your date of separation as this can be useful later, when separating assets and showing proof of separation.
4. Just taking the house
Often the most comfortable decision for many women is to keep the house – and nothing more. It’s a place filled with many happy memories, so naturally parting with it can be painful. But consider whether you’ll be able to maintain the house on your own? While your fixed costs remain the same, your income will have halved and you may end up being the primary carer of your children. And even if you’re thinking of downsizing and buying on your own later, remember your one income may not be enough to help you get back onto the property ladder.
Even if you’re thinking of downsizing later on, consider whether you’ll be able to get back onto the property ladder in the future.
5. Trying to ‘go for everything’
Don’t waste time and money fighting for things that you don’t really want or need. While it might hurt to see your ex walk away with a ‘few things’ you wanted, it’s much easier than a drawn out, stressful expensive divorce.
6. Not budgeting for single life
Divorce proceedings can take months or even years, so make sure you have enough money to cover your regular expenses during this time.
Start taking note of your regular expenses (food, transport, electricity, etc), so you know what it costs to live your life. Knowing your numbers is the foundation of being able to make plans for your future.
7. Not hiring the right lawyer
Don’t hire a lawyer based solely on fees, as a good lawyer will more than pay back their fee with the outcome they provide. Choose someone who answers your questions with patience and genuinely wants to help you. Ask for recommendations from friends and family or a trusted professional.
8. Splurging after settlement
Once your divorce is finalised, it can feel like an anti-climax. It’s natural to want to go on a holiday or splash out on a new car. But without a spending plan, it can be frighteningly easy to blow through cash. And remember, bad spending habits are hard to break.
9. Not getting expert advice
Due to the long-term effects of divorce, it may be necessary to consult with a financial adviser, a mortgage broker and your accountant. A skilled team will help you feel more in control and reduce any unnecessary fears, while also making sure your future is secure.
While divorce can be daunting; you will get past all the legal, financial and emotional aspects. Divorce may seem like an ending – but it’s also a new beginning for you to live a fully rewarding life that you desire.
Tamara Gillman is a Certified Financial Planner® and the founder of True Journey Financial Planning. She is based in Brisbane and works online with people all over Australia to turn their dreams into reality. She provides advice in the areas of Debt Reduction, Superannuation, Investing, Property, Personal Insurance and Wealth Creation.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice for your situation, prior to acting on this information.