• Miss Money Box

Money and divorce

This post contains sponsored content. For more information read my disclosure statement.

When you build a life with someone, maybe get married, buy a house, get a pet (or two), have kids, the prospect of tearing it all down and splitting it up seems unfathomable. But sadly, relationships do fail, and more recently thanks to the coronavirus pandemic, they’ve been failing a lot.

A study on the impacts of Covid-19 by Relationships Australia in May 2020 found that 42% of people had experienced a negative change in their relationship with their partner due to the effects of the coronavirus lockdown. Working from home, looking after kids and home schooling have seen 55% of people feeling challenged by their living arrangements.

“Walking away from a relationship is stressful, and there’s a lot to manage,” says Natalie Berrell from Divorce Financial Advice.

“Outside of buying a house, separating or getting divorced can be the next most expensive thing you’ll go through in your life. While it’s a highly emotional and traumatic period in a person’s life, it’s really important to try and focus on the financial implications because they can have long-term effects.”

According to Moneysmart, there are four first steps you need to consider when you separate, and all of them involve your finances:

  • who will stay in the house and where the other person will live

  • if you need to change the way you're paying bills, debts, rent or mortgage

  • what to do with any joint bank accounts

  • if you have children, where they'll live and how they'll be financially supported

“We started Divorce Financial Advice to help make the money side of the process easier by building a financial model to see how your post-divorce financial situation might look. We can then work with you and your lawyer to put together an appropriate settlement structure,” says Natalie.

Women and divorce

When it comes to splitting up, women who have taken on the bulk of caring responsibilities and time out of the workforce can often experience damaging financial ramifications. There have been multiple studies that show divorce has a significant negative effect on women’s income, while men’s income often increases after divorce.

One study by the Australian Institute of Family Studies found four years after divorce, women experienced a three percent increase in income from pre-divorce levels. For divorced men, income increased by 12.5%.

“For women with children, the financial outcomes of divorce can be worse,” says Natalie. “The long-term impacts of separation contribute to the precarious situation many women face in later life, especially when it comes to superannuation.”

Don’t forget about superannuation

The superannuation gap between men and women begins to widen when many women are in their 30s – a woman’s peak childbearing and childrearing years. By the age of 40, men have twice the amount of superannuation as women.

Australian women currently retire with at least 37% less superannuation than Australian men. Further to this, Australian women over the age of 55 are now the fastest-growing homeless group in Australia.

“When it comes to ending a relationship and sorting out finances, superannuation can be an afterthought. It shouldn’t be,” says Natalie. “Alongside your house or other investments like shares, super is something we can help figure out alongside your lawyer when it comes to negotiating a settlement.”

Sorting out your financial situation while separating or divorcing, while not fun, can be a lot less stressful with the help of experts. If you find yourself separating and needing help, get in touch with Divorce Financial Advice for a free consultation.