The end of a relationship often marks the beginning of changes to living arrangements, care for children as well as financial resources. While many people aspire to be financially independent, often they don’t know how to do it. There are many things that you can implement today that can make a significant difference to your long-term financial position. Financial freedom often feels impossible, yet is simpler than many people realise and it starts with establishing your financial independence.
According to Real Insurance^, 73% of those surveyed stated that they were financially unprepared for the events that unfolded in separation. Here are 8 tips for creating financial independence and the financial freedom you seek:
- Preparation is key. Some people are in the fortunate position of planning their break-up. If this is you, then ensuring that you have sufficient funds before ending your relationship can help make the transition into a new home more seamless. Being able to pay for a bond, furniture and filling the fridge is a small self-esteem booster in a time of change.
- Stand on your own feet. Creating financial independence begins with ceasing or limiting any joint financials. A simple play to start is by having your own bank accounts and credit cards and setting up your own internet banking (if you don’t already have it). Your bank is able to assist with establishing accounts should you need help. Remember to put your income into your own account (not in to the joint account) and protect your privacy by changing passwords.
- Protecting any joint investments and accounts. Many couples have a mortgage, off-set account or investment account together. In the short term, to protect you from your ex-spouse extending the debt or removing funds, talk to your bank or financial institution about ensuring you have a dual-signatory function (or two-to-sign set up) on your account.
- Love your work. You’ll never work a day in your life when you love what you do. Have you considered pursuing a passion, getting a job or finding a job that you love, asking for a pay rise, re-training or studying? Having your own money and earning it in a space that you are passionate about makes your work far more enjoyable.
- Avoid being dependent. Learn to live within your own means and live comfortably on the money that you earn. Avoid relying on child support or spousal maintenance payments – instead, put these funds into a different account and watch your savings grow.
- Reach a financial agreement. Formalising the separation with a financial settlement and lodging the agreement with Court creates a finality to the financial relationship. It also protects you from further demands for funds, inheriting your ex-spouse’s debt or potentially fighting to keep an asset.
- Make your money work. If you are fortunate to receive a financial settlement or if you are left with some savings, the smartest thing you can do is not spend it on your consult a financial advisor for the best way to make the money or investment work for you and give you a positive return.
- Always have a rainy day or discretionary account. Whether you remain on your own for a while or are in a relationship, you should always maintain your financial independence. Many couples agreed portion of their wages being deposited back into their respective personal accounts. This means that if you ever need to lend money to a family member, fly overseas or need urgent funds, you will always have means at your disposal, without having to consult your spouse.
Love it or hate it, money is what makes the world go around. Money allows you to pay for your shelter, food, communication, transportation and so many other essentials. Having control over your funds, how you spend it, how debt is managed and how it is invested can make a significant difference to your lifestyle and wellbeing.
What can you action today or this week to create your financial independence and become financially free?
By Rachael Scharrer
~Novel Serialisation: Heavens Fire~
REFERENCE:
^ https://www.realinsurance.com.au/news-views/the-real-cost-of-separation
BIO
DivorceAnswered.com.au was created by Rachael Scharrer to empower separating individuals by filling the knowledge gap between what legal professionals and the general public know about divorce and separating. It aims to arm them with the relevant knowledge, options available and offering specialised tools, whilst being time and cost efficient. Divorce Answered guides self-represented individuals and supports clients working with lawyers on a limited budget. Visit www.divorceanswered.com.au for blog, e-books, affordable resources and to book your personalised Strategy Session.
