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4 ways to financially prepare for a breakup

How to financially prepare for a breakup. Source: Getty

Breakups can be emotionally exhausting, and they’re made particularly tricky by children and shared finances. 

On top of that, the financial decisions you make during a divorce or a separation can ripple throughout the following years, so making the right decision at the point of breaking up is imperative. 

Yahoo Finance spoke to financial adviser Helen Baker to find out four ways to financially prepare for a breakup.

You need a good team

The first step to getting your finances in order is getting a good team around you, Baker says.

“In my opinion, you need legal advice, financial advice and emotional advice,” she said.

“I really recommend that you seek out those professionals, because while friends and family are good, people don’t know what they don’t know. 

Get pre-settlement advice

Baker says she all-too-often sees people come to her for financial advice after they’ve already settled – but that could be too late. 

“People are either forced to sell or to play catch up, which has costs associated with it. What you want to do is get pre-settlement financial advice before you walk away, so that you can make sure you walk away with what works best for you.”

Get a handle on the situation

This one is particularly aimed at women who are in a relationship with men who have a business, or they have assets that they don’t understand.

“They need to understand what is at play and what it all means,” Baker said.

This can be things like knowing the amount that is in your spouse’s superannuation fund or insurances when it comes to raising children. 

“What happens if that person passes away and there’s no more child support? What happens if you’re carrying a significant debt? Where are you going to get the money from to keep going?”

Have your five foundations in place

Baker has five foundations that she says people need in place for their financial future. 

These are: 

  1. An emergency fund

  2. A spending and investment plan

  3. Your general insurances in place

  4. Your personal insurances in place

  5. A plan for your estate

“Whether you’re single, married or young, it doesn’t matter,” she said. “You need to have these five foundations in play to protect your future.”

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