Nobody gets married thinking that it will end.
We all think our marriages will last forever, but with one in three marriages ending in divorce, the facts just don’t support the fairytale.
Unfortunately the reality is that divorce has a particularly devastating impact on women’s finances.
A recent article in The Age Sunday Life magazine chronicled the overwhelming impact a marriage breakdown has not only on your emotions but also on your finances.
The Financial Impact of Divorce
While the financial impact of divorce on both men and women is significant, research shows that divorced women, especially those with dependant children, find it much harder to financially recover after divorce.
In my work as a mortgage broker, I see the harsh realities of what can happen when you don’t take financial control and safeguard your finances.
When the Debt Gets Tangled
I’ve recently come across a sad, but not uncommon situation with one of my clients.
She had recently separated and was looking to re-finance a property in her name by buying out her partner. Over the years they were together her self-employed ex-partner had difficulty obtaining personal finance in his own name as a consequence of the unstable nature of his work.
To help out she took out additional credit cards, a car loan and personal loan in her name.
Unfortunately, the crushing reality for her now is that she is solely liable and responsible for repaying this debt, as it is her name on the contracts. He, on the other hand, is enjoying the benefits of what had been purchased, while having no legal responsibility to repay the debts that have been incurred.
While the reality is there will often be a blending of finances and sharing of debt in a marriage, there are some safeguards you can put in place to minimise the financial impact of a divorce, if it should eventuate.
Protecting Yourself Financially in a Relationship
First and foremost, females (and males) should avoid taking on additional credit cards or personal loans for your partner in your name. If your partner doesn’t have sufficient income to obtain approval on their own merits then taking additional loans just isn’t a financially sound decision.
With credit card debt spiralling out of control in the developing world, you want to do what you can to protect yourself from this impulse buying, for yourself or your partner’s whims.
If your partner has a more risky and experimental approach to investing, be it in superannuation, shares, or other investment areas, suggest a 50/50 approach. That way you maintain control over half of the money, and they can be accountable for the other half. This at least will diversify the risk (for both of you) rather than putting all of your eggs in the one basket.
While nothing can safeguard you against the financial implications of a separation, by considering what pitfalls may lie ahead, and putting a few steps in place, you will minimise your risk and put yourself in an empowering position for whatever may lie ahead.
Any partner who denies you the chance at financial independence inside a relationship, probably doesn’t have your best interests at heart anyway.
Want to Get in Touch?
If you’re interested in your own financial independence, or you just want to talk through your financial situation, please email email@example.com to organise an appointment.