Divorce means change. A complete change to your way of life, address and bank accounts too.
And we don’t need the latest round of research to confirm that women are worse off than men after a divorce. But here it is anyway:
The Australian Institute of Family Studies has highlighted the obvious. Women are financially worse off than men after a divorce. Although the goal of an equal society has never been so close, it’s still predominantly men who are the breadwinners, and come out in a better financial situation after separation from a partner. A little more interesting is finding that it takes women six to seven years to get back to their pre-divorce level of income. Especially if there are children, as this can be a major barrier to entering the workforce after a divorce.
Researchers from the Australian Institute of Family Studies point out that recent divorcees more than likely would have had to sell their home as a result of separation, and in conclusion, missed out on part of the property boom, which fuelled the growth of the personal wealth of many Australians over the last decade.
It begs the question though, what can women do to make sure they’re not caught on the financial-back-foot after a breakup?
Keep your head high
Here are some practical tips about lessening the financial impact of divorce or separation.
- Make sure you have your own credit history and a history of savings in your own name. These are two things lenders will look for when making a decision to approve a loan. If you’re recently divorced, it will be much easier to get a loan if you have your own credit cards, savings accounts and transaction accounts with a proven history of good money management. If one person decides to keep a jointly owned property, and the property has a mortgage, the home loan will have to be refinanced in one of the people’s names – this requires the person in question to have the finances to service the new loan.
- Have a plan of what you’d like to do if you come into money. Will the money be invested? Will it sit in a high interest savings accounts? Maybe it will need to go towards school fees? Whatever the purpose, it’s important to have a plan. Speak to financial advisors who can analyse your situation, weigh up your options and advise you on the best course of action to keep yourself financially solvent.
- Set a budget: This follows on from the ‘have a plan’ step, and involves taking ownership over your day to day expenses. If you’re struggling financially, you’ll have to cut down on the little day to day expenses that can add up over the course of a week. By writing these expenses down, you’ll have a clear idea of which expenses to cut and which you can keep.
- Keep track of everything that happens throughout the divorce process – this is often known as a ‘divorce file’ or a ‘divorce diary’. Divorce does not end with separation, the process will continue for months and sometimes even years after two parties have go their separate ways. Papers must be signed, bank accounts closed and so on, and you will need this information on hand when starting the next financial chapter of your life.