Women in particular are at a high risk of losing out financially in a divorce – but this doesn’t have to be the case.
Often women get custody of the children, and ownership of the family home. But they don’t do too well with disposable household income, superannuation and investments.
There are reasons for this: statistics show that women still generally earn less than men and they also tend to have less total years in the workforce because of taking time out to raise kids. So when it comes time to divide wealth, many women also have less super.
Beyond just earning less and having less super, women may also have been shut out of key decisions about the family finances. This lack of involvement in structuring personal finances and investments can make a woman vulnerable when she suddenly has to do it herself; often she lacks confidence in reconstructing her own financial future because she feels she’s starting from scratch.
So when a divorce looks imminent, what should a woman do to protect herself and ensure she has the best chance for a healthy financial future in tough circumstances?
Firstly, get expert advice. A good lawyer is an essential start, but you also need your own financial adviser; someone who engages with you and works to understand your needs rather than talking at you about their approach.
Ask around: there are plenty of good female-friendly ones out there.
Before seeing an adviser you can do some things for yourself. For instance, separate your bank accounts and cancel your joint credit cards as soon as possible. You may have an amicable divorce, but in the event that something goes sour, you want to make sure you’re protecting yourself from potential risk.
Check other financial arrangements such as insurance policies, health insurance and car registration.
Start assessing what your cash flow will be like as a single person. Ask yourself what you have coming in and going out and make sure it’s sustainable. Make a list of the assets that you’ll gain or lose in the split and be accurate about their value.
When you meet, your adviser will want to discuss the implications of asking for the family home in your settlement. If it comes with a big mortgage, the property might be an asset but could create a cash-flow burden month-to-month
They’ll also encourage you to negotiate a fair share of the total pool of superannuation. This is quite within your rights, and is especially important for women who’ve take time out of the workforce to raise kids.
Your ability to earn income is your most important asset. If you aren’t working, now is a good time to start – it’s not only a good financial decision but it gives you more options.
Divorce is never an easy time for anyone. Getting professional legal and financial advice will be vital in getting you helping you create a future that you control.