How to financially heal after a long-term break-up
Splitting from a long-term partner can hurt much more than just your heart. Financial advisor Helen Baker sets out how to get control of your money, how to make smarter decisions and how to see this as an opportunity to feel empowered by your personal wealth.
Relationship breakdowns are never happy and rarely simple. But it’s not just feelings that are hurt – breakups can take a huge financial toll, which may linger long after the heartbreak has healed.
Don’t let yourself be crippled by bad money decisions – this is a time to reinvent yourself for the better and stand on your own two feet!
Get control over your money, assets and liabilities immediately post break-up. That includes closing joint bank accounts and changing utilities out of both names. Ensure as many of your assets you will control are solely under your name.
Don’t forget to update your bank details with your employer too – you don’t want your pay to bounce because the account’s been closed, or to keep hitting that joint account to fund your ex’s new lifestyle!
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Home vs super
A trend I commonly see is that men love their superannuation and won’t part with it, while women love their home and don’t want to lose it. But don’t be fooled into comparing the two on dollar values! In life you need both.
Super doesn’t cost much to manage. The family home, meanwhile, is much more expensive to retain. There are mortgage repayments, maintenance, insurance, rates, sometimes body corporate and so on.
So, a $500,000 property isn’t necessarily worth the same as a $500,000 super balance!
Sadly, I’ve seen many women push to keep the family home at the expense of all other assets – only to discover they can no longer afford to keep it on one income.
Seek (qualified) help
Have you received everything you are entitled to? What if you have to sell what you walked away with? Will you be lumped with Capital Gains Tax or unforeseen costs?
These are the questions your financial adviser and accountant can help you with BEFORE you sign anything, to understand what you’re really getting.
And while loved ones mean well, that advice should be from those suitably knowledgeable and qualified to give it.
Build your future
Reaching a settlement isn’t the end of your journey – the next step is to build a strong future for yourself.
Consider these the five foundations to your financial future to protect what you build on top:
#1. Emergency fund: If you have one already, great! If not, your separation is proof that not everything in life goes to plan and you’ll need a cash stash for emergencies.
#2. Spending and investment plan: A proper plan will give you visibility over where your money is, where it’s coming from and where you can make it go further. And how much you have left to rebuild.
#3. Insurances: Being newly single, check the value and validity of all your insurances. Income protection insurance may be especially important now that you’re relying on just one income.
#4. Superannuation: Check in with where your super is at and whether you can adjust your investments to deliver faster growth. You could also now be eligible for tax breaks and government co-contributions that you may not have been before.
#5. Estate planning: This is critical to update following a break-up but is easy to overlook. Ensure your will and estate planning reflect your new reality, especially where kids are involved.
Don’t make emotional decisions
I can’t emphasise this point enough. It’s very easy to just accept a settlement or not act on things that need your attention because you’re hurting and you “just want this to stop”.
But be fair on yourself: walk away with what you rightfully deserve and what you need for a comfortable future.
It’s hard to think about money when your heart aches. But you could be paying dearly for bad money decisions made here and now, for many years to come.
Besides, nothing is sexier once you’re back on the dating scene like an independent person able to stand tall and proud on their own two feet!
Note this is general advice only and you should seek advice specific to your circumstances.
Helen Baker is a licenced Australian financial adviser and author. Helen is among the 1% of financial planners who hold a master’s degree in the field. Find out more at here.