Yahoo Finance Money and divorce: 4 expert tips to get your finances in order
A family law expert shares her four-step money guide to divorce.
Untangling your finances at the end of a relationship is never easy, but there are steps you can take to help the process go more smoothly.
Family law mediator and Simple Separation founder and CEO Christina Salvo has shared four tips.
Also read: How to split assets and financially recover from divorce
Also read: 4 money tips to survive the early days of divorce
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1. Outline your assets
Both you and your ex-partner have a duty to disclose all your sources of earnings, interest, income, property and other financial resources.
“This is the first, most important part of the process to set you up for a smooth financial separation,” Salvo said.
Usually, you will need to provide documents to prove the balances of accounts and values of shares, property and superannuation.
“It's important to be completely transparent during this process. If you withhold information, it may hold up the process, which means more time and, in turn, more money needed to reach a final decision. If an asset is not disclosed the whole agreement could be overturned.”
2. Value your property
Next, it’s important to get an accurate and current valuation of your property.
“By engaging a certified property valuer experienced in family law valuations, you will receive an independent and unbiased property valuation that contains the current fair market value after considering various important market factors,” Salvo said.
3. Choose your pathway
The average cost of a traditional divorce is between $50,000 and $100,000, according to Money Magazine. So, it can be well worth doing your homework and finding out which pathway makes sense for you.
One path is conducting direct negotiations with your ex. You don’t necessarily need to engage a lawyer to make your agreements legal, Salvo said, with DIY kits available from The Family Court and Federal Circuit Court.
Engaging lawyers can also be an effective way of reaching agreements because they will negotiate on your behalf.
“If you elect this path, it would be good to set a time limit or else your legal fees can really escalate if the negotiation is not proving successful,” Salvo said.
Another option is mediation. This is where a third party will facilitate negotiations between both parties and it is usually cheaper and quicker than going to court.
4. Create a post-divorce budget
Lastly, it’s important to create a post-divorce budget to help you manage your new financial situation.
Here are some steps you can take:
Round up all your financial information. This includes bank statements, credit card bills and investment-account statements.
Calculate your income. Consider your job, plus any spousal payments and child-support income.
Identify your expenses. Write down your monthly expenses, including rent or mortgage payments, insurance, utilities, transport, entertainment and groceries.
Calculate your new budget. Deduct your expenses from your income and see if you need to make any adjustments.
Prioritise your expenses. Work out which expenses are essential and which are discretionary and can be cut back on.
Review and adjust regularly. Your budget will likely need to be adjusted over time as your circumstances change, so make sure to review it regularly.
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