Six things to remember when managing your finances during a divorce
It’s fair to say most of us want “I do” to mean forever but for some, that’s not how marriage works out.
According to the Australian Bureau of Statistics there is one divorce for every 2.3 marriages registered. It’s forecast divorces will rise by 4.3% to 52,117, in 2021 (IBISWorld). The COVID-19 pandemic has caused financial strains on relationships, identified as a key contributing factor for couples filing for divorce. Should you find yourself in this position, you – and your finances – need to be prepared. Here are six important things to remember.
- Joint home loan
If your home loan is in both names make sure you continue to pay the loan on time. If this isn’t possible, ring your lender and organise an interim arrangement as soon as possible. If you ignore the loan and your responsibilities, you could potentially impact your future credit rating.
- Know what you are liable for
You may be liable for any redraw on your home loan. What loans do you and your partner have together? Check to see if any loans are in joint names or if you are a guarantor on any loans.
- Joint accounts
Check if any joint savings accounts are single access only. Can either party withdraw additional funds on your joint account and loans without the other person’s consent?
- Avoid overdrawn accounts
Never allow your accounts to overdraw, even if the bank approves. An overdrawn account will significantly affect your ability to borrow in your own name. It generally takes at least six months without presenting any overdrawn accounts to reinstate your borrowing capacity.
- Don’t stick your head in the sand
When it comes to your finances, know what you owe. Take a deep breath and create a personal budget. This simple guide will be the road map for managing your money.
- Ask for help
There is no shame in not knowing. The first step is to be willing to own your current position, followed closely by remembering we all have different life events going on. Next, be open to working on a solution and moving forward.
Divorce (and any relationship breakdown) can be difficult to manage, especially when it comes to separating finances. It may seem daunting at first, but a few simple actions can get you back in control of your money – and help create a life you deserve.