Dealing with a breakup is hard on its own, but it can feel even more challenging when you have to untangle your finances from each other. Whether you were married or simply part of a long-term relationship, any joint financial responsibility must be managed by one of you. In an ideal world, you’ll be on friendly enough terms to sit down and have a conversation about who should manage what. But, when that isn’t possible, you may need to step up and take some control.
Regardless of the surrounding circumstances, here are some tips for managing your finances after a breakup.
Consider Professional Help
Whether you are getting a divorce or simply breaking up, you may want to work with a professional to ensure all financial matters are handled properly. This can include a lawyer, a financial advisor, or both.
Separating joint debts and assets can be complex, and not everyone is entitled to a 50/50 split. The right professional can help you determine what records need to be gathered to ensure that everything is handled properly based on the equitable division or all properties and obligations.
The first step you should take is to separate your actual money. Begin by opening a checking account in just your name, if you don’t have one already. This gives you a place to move any funds that are yours, including the depositing of future paychecks or the receipt of direct deposits.
Often, this step also includes closing joint accounts. When you close an account, the money is often either provided in cash or can be moved to a different account. How those funds are divided depends on the unique circumstances of your relationship, so make sure you don’t simply pull all of the money and keep it for yourself.
Additionally, you will need to address any bills that were previously setup to automatically be paid from that account as well as any direct deposits. In some cases, these can be changed fairly quickly. However, a direct deposit change may take additional time. If so, you need to leave the original account open long enough to receive any funds that can’t be redirected immediately.
Handle Joint Debts
If you have joint credit cards or loans, then these will need to be managed as well. Often, the primary person on the account must be involved for any changes, so it is best to work with your former partner to handle these tasks. You may need to close joint accounts or have one of the names removed from the card if a debt still exists. Most financial institutions have methods for managing these tasks, so work with them directly to find out your options.
How the responsibilities associated with the debts are divided will also vary depending on your individual situation. When a debt is tied to an asset, such as a home or vehicle, the person keeping the property may need to assume responsibility for the remaining debt as well as buy the other person out if any equity exists. You may have the ability to avoid equity payments by dividing your property in a way that compensates for any equity that would be owed to the other party.
Create a Budget
Now that your financial situation has changed so dramatically, you will need to create a new budget based on your personal income, share of the debts, and ongoing living expenses. If you are working with a financial planner, they can assist with creating a new plan. Otherwise, you can make one yourself based on your financial details.
It is important to remember that a breakup can have some financial difficulties, so proper planning can make the transition as painless as possible. Prepare to face some potentially lean times while you adjust, and keep extraneous spending to a minimum. Once you find a new rhythm, revisit your plan and make any necessary adjustments. Then, you can rest assured knowing your finances are in order and you can move on.
Below is resource on potential options to help with your finances
If you are in a situation that requires legal assistance, you may be able to get help from your state or territories legal aid organisation (not that the free service is means tested).
Financial counselors of Australia is another professional yet free service which can help with money related situations, especially for those that are under serious financial stress.
If you are collecting Centrelink, they may also provide certain services to help with the dividing and/or changes to your benefits. With any substantial change to your financial situation, you must contact Centrelink as this will have a impact on your benefit payments – here are a range of important Centrelink contact numbers.