Imagine it’s early Saturday morning, your favourite time of the day – the world is asleep as you sit outside, savouring your cup of coffee…
You turn as your husband walks to you, dressed in his suit, documents tucked under his right arm as he fastens his tie.
“I’m heading into the office, I’m running late, can you quickly sign some documents for me?” placing them in front of you.
“What’s this about?” you ask.
“Just tying up some loose ends…”
We have found the above circumstances to be quite common and a good helping hand and guidance can help you fill the holes and get an overall picture of your financial situation.
We’ve listed the top five things to consider so you can be well onto the path to taking control of you and your family’s finances.
1. Understand your current financial situation
Getting an overview of your current financial situation prior to settlement should be done before anything else. It’s crucial to understand the assets that are available to you – specifically liquid assets such as cash or credit cards available to meet your immediate needs. In addition to your assets, its key to understand immediate financial commitment such as home loan repayments, school fees, and credit card payments etc. and details of any loans and borrowings in place.
Re-visiting your financial position throughout the process and following the final settlement of your divorce is important. We can work with you and your lawyers to help you understand and manage your current financial position.
2. Take control of your banking needs including bank and loan accounts
Once you get have an understanding of what bank accounts and loan accounts you have, it’s important to determine the following:
- Do you have access to all your bank accounts?
- Are you the signatory on all accounts?
- Do you have access to all facility agreements?
- Are you a personal guarantor on any loans?
Ensure you know the answers to the above questions, and that you have a full understanding of your financial commitments. We can assist you with establishing your online banking facilities and provide training. We can also liaise with your bank manager or relationship manager to understand and re-structure accounts and/or loans to suit your specific needs.
3. Create a budget and develop an understanding of your income and expenses
Understanding your monthly income and expenses is vital. Creating a monthly budget will help you get a good picture of your regular expenses and ensure all your commitments are met. It’s important this exercise is undertaken immediately; and is continually re-visited during and after the settlement process. A bookkeeper or an accountant can assist with the set up and ongoing management of your income and expenses and your budget.
4. Review your superannuation and insurances
Typically, your superannuation and your insurance policies are ‘set and forget’ items – meaning that once established, individuals usually neglect to regularly review. However, superannuation is a great avenue for wealth accumulation and insurances. Ensure you don’t lose more when faced with a crisis that impacts your earning capacity. A significant life event such as a divorce can have a large impact on the effectiveness and relevancy of both your super and your insurances. Therefore, these should be reviewed.
We recommend you speak to an expert to understand your current position, and formulate a plan to ensure that both your superannuation and insurances work to meet your personal needs.
5. Understand how your assets are structured and your tax lodgement requirements
Often assets are held in various tax vehicles such as trusts or companies, depending on their use i.e. income producing assets such as a rental property, versus personal use assets such as a holiday house. Understanding the nature and structure of these assets and relevant tax requirements and consequences is imperative prior to settlement, to help you determine the right assets for you.
We recommend that you speak to an expert to gain a clear understanding and ensure the best result for you.
Even at the best of times, managing your finances can cause stress and confusion, but these feelings are often heightened during times of emotional turmoil. If you need assistance or guidance in respect to any of the items listed, please contact Diana Dimitrov our specialist in assisting women and families. (03) 8823 6884.