Finance check after divorce or break-up.

Finance Check-up After Divorce or a Break-up

Life after a divorce or a break-up brings many changes, and one of the most crucial aspects to address is your financial well-being. Whether you’ve been sharing expenses for years or are newly navigating financial independence, a thorough financial check-up is essential to regain direction and build a secure financial future.

1. Know Your Numbers: Assess Your Financial Position

The first step is to take stock of your current financial situation. Start by making a list of all your assets and liabilities:

• Assets: Bank accounts, investments, property, superannuation, and any other valuables.
• Liabilities: Mortgages, car loans, personal loans, and credit card debt.

Understanding where you stand financially allows you to make informed decisions about budgeting, investing, and planning for the future. If you had joint finances with your ex-partner, ensure that shared accounts and liabilities are properly divided and restructured.

2. Review Your Superannuation & Insurance Policies

Many people overlook their superannuation and insurance policies during a break-up, but these can have significant long-term consequences.

• Superannuation: Check if your super was impacted by the separation and update your beneficiary details if necessary. If a settlement involved a division of super, ensure the transfer is correctly processed.
• Insurance: Review your life, health, income protection, and home insurance policies. Adjust coverage if your financial obligations or dependents have changed.

3. Update Your Accounts & Legal Documents

Now is the time to update all financial accounts and legal paperwork

• Bank Accounts: Close any joint accounts no longer needed and open new ones in your name.
• Credit Cards & Loans: Ensure joint credit cards are settled and removed from your name if necessary.
• Legal Documents: Update your will, power of attorney, and any other estate planning documents to reflect your new beneficiaries.

4. Check Your Credit Score

Your credit score may have been affected by joint debts or financial obligations with your ex-partner. Obtain a credit report to check for any errors or outstanding liabilities that could impact your financial future. If there are debts you are no longer responsible for, ensure they are removed from your record.

5. Assess Your Budget & Give Yourself a Financial Health Check

Your income and expenses will likely change after a divorce or break-up, making a fresh budget essential.

• Income: Adjust your budget based on your new income level and any financial settlements.
• Expenses: Track your monthly expenses and look for ways to cut back where necessary.
• Debt Management: Prioritise paying off high-interest debt to improve your financial stability.

6. Make New Financial Goals

With a fresh start comes the opportunity to set new financial goals that align with your current situation. Consider:

• Short-term goals (e.g., rebuilding savings, reducing debt, or adjusting spending habits).
• Long-term goals (e.g., investing, buying a home, or planning for retirement).

Set realistic and achievable milestones to help you stay on track.

7. Set a New Financial Plan

A new financial plan is crucial for moving forward. Your plan should include:

• A revised budget
• Savings strategies
• Investment plans
• Debt repayment strategies

If your income has changed, consider adjusting your financial commitments accordingly. This may include downsizing your home, reassessing financial investments, or setting up new income streams.

8. Speak to Your Accountant About Your Revised Retirement Plans

Your retirement strategy may need adjustments post-divorce or separation. It may be time to

• Reassess your superannuation contributions and investment strategies.

• Understand any tax implications from property or asset divisions.
• Create a revised retirement savings plan that aligns with your new circumstances.

9. Build an Emergency Fund

Having an emergency fund is crucial, especially during a period of financial transition. Aim to save at least three to six months’ worth of living expenses to cover unexpected costs. Start small and build over time, using a separate high-interest savings account if possible.

Take Charge of Your Financial Future

Divorce or a break-up can be financially daunting, but with a proactive approach, you can rebuild and strengthen your financial foundation. By knowing your numbers, updating your accounts, reassessing your budget, and setting new goals, you’ll be well on your way to financial security.

If you need a finance check-up after a divorce or break up contact our team at Fincare Accounting. Our accountants will help you navigate this transition with greater confidence and clarity to build a secure financial future.