She's On The Money - "We want prenup! We want prenup!" (Yeah!)

Episode Date: July 28, 2020

We know divorce can be extremely painful emotionally, but what about financially? This week, we talk through the real cost of divorce, explaining how to set ourselves up financially if we are staring down the barrel of a big break up, as well as ways we can keep the cost as low as possible.Do you love the podcast sick and want more SOTM? Obvs! Join our Facebook page to share your money wins and money confessions, follow us on Insta for daily inspo to keep you on track and DEFINITELY subscribe to our newsletter, the written recap of the pod’s key takeaways, including some bonus bits you won’t want to miss. Finally, if you’re in a money mess and need help untangling the muddle - we’ve got you sorted – simply record your question and send it through to us at [e-mail] and you may just end up on the podcast!  Your hosts are Georgia King and Victoria Devine. The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the Money, the podcast for millennials who want financial freedom. My name is Georgia King. I'm a copywriter and journalism student who has lots left to learn when it comes to money. And thankfully here to help me out as always is financial advisor, Victoria Devine. Say hello. Hello, friend. Now today on the show we are going to be tackling quite a big one, that is what is the real cost of

divorce? Now it's estimated that in Australia roughly 50,000 divorces occur each year and that perhaps unsurprisingly women are usually more likely to come out of the split worse than men. Now divorces are also not as simple as calling it a day, going to separate weights. Assets need to be divided, kids need to be considered and the whole process can end up being significantly more expensive than you may think. But before we talk through this big old topic and nut out how we can set ourselves up for as financially positive a divorce as possible victoria let's start on a happier note or maybe it's not happy talk me through your money wins or confessions from this week jojo it's not a happier note i have a confession this week to share with you

what have you done so i think i gloated on the podcast very recently that i had a money win because i didn't have to pay for my parking in the cbt yeah but i didn't knock on wood when we i recorded that so i actually have ended up with a parking fine for parking in a spot for too long and it turns out that that is 120 fine here in the melbourne cbd so yeah a bit steep bit of a sting parking should not be a thing right now i don't think no it's a bit rude because again i was at work exactly but i think that you know maybe that was deserved because i should have kept an eye on mind parking time a little bit more closely. But that is what it is. Have you got a money win or confession for me? I've got a win. I've got a win to make up for yours. Although it is

kind of sad. I feel like our money wins and confessions are getting sad and we are grasping at straws. But I'm here for this. It's a tough time. I've got a parking ticket. What have you done? So a couple of weeks ago, back in the days when you could go to cafes and sit in them for that limited time period in Melbourne yes I remember those days fondly yes so I went to a cafe with a girlfriend we waited for an hour for a seat at a table because it was so novel you know we hadn't done that in a long time that's crazy we waited it was fine we sat down you know chatted for a little bit decided what we were going to order I went up it was going to be my shout I didn't tell Erin that my friend but it was going to be a girl anyway ordered went to pay I only

had cash on me because i lost my bank card like oh no like i blocked it and everything it's all jay um went back to erin said girl can i borrow your card they're not taking cash at the moment covid life and she was like i only have cash so we had to leave there without our 50 breakfast coffee chai all of the things so it was kind of waste breakfast at home yeah i did so that's kind of where the wind ties into it it was a waste of a morning i mean i still got to hang out with erin Love you, doll. Heard you're a top bloke, Erin. She goes, all right.

But, yeah, I didn't pay for my breakfast or for hers. So $50 in my bank account that I wouldn't have had. Yeah, okay. Good on you, COVID. That's kind of a sucky COVID story. But that's all right. Let's turn our attention to our brilliant Facebook community. Yes.

Get involved if you're not already a member. Victoria, do you have a favourite post from this week? I do. I have one from Ashley and she said that she has a money win for us. great love that she said that she's getting married in october and then in brackets she said hopefully with the fingers crossed but she said so there's a very very slim portion of her budget allocated to buying clothes or nice treats for herself and she was desperate for a new winter dress and a few nice pieces to spruce up her wardrobe and she went to the op shop last week

spent a total of 60 on five different items three of which were brand new tags still on and two of them were from higher end designer brands like peter alexander and trent nathan she said she added it up and to buy these clothes in store it would have cost her more than 250 which is a massive saving 190 she says she's feeling very proud of herself for not only snagging a total bargain but investing in more sustainable fashion options and she said that she has actually had so many compliments on her new outfits already which i love and i think that that is just really inspirational given our fast fashion yeah exactly recently georgia good on you ashley loved that what have you got for us georgia okay so mine it's not a win but it was a very cute post that

i saw today so it's from chloe she's written in hi guys new to this group i thought i would share she's um actually printed out a money saving tree oh my gosh i saw this yeah you would have seen it it's a literal tree and each leaf represents 50 so she colors them in each time she pops Yeah, it was like a holiday savings account, right? Exactly, yeah. So the whole tree with all its leaves amounts to $10,000, which I think is 200 leaves of math. So, yeah, that was just really cute, a nice little idea.

It's for a trip to Europe. Hopefully that will happen one day. I wonder if we can get that printable in the Facebook group. Yeah, I think that could be a thing. I'm going to find Chloe's message. Get in touch with Chloe. I'm going to get in touch with Chloe. Chloe, I'm coming for you and your tree.

Look out. All righty, now it is on to the main topic of today's show. What is the real cost of a divorce? Now, we've spoken about engagement rings and weddings on the show before, but we're yet to have explored the financial impacts of divorce, or as it is technically known, the formal legal ending of marriage, which you guys probably already knew, but I thought I'd throw it in there. Now, given that one in three marriages in Australia does actually end and that women are often left financially worse off from divorce than men, we think this topic is absolutely worthy

of conversation, even if divorce may seem a foreign concept for our younger listeners or a far-off concept for people that are loved up. So to start us off, Victoria, can you please give us an idea of what is actually involved when it comes to divorce and why it can be so expensive. Yes, so I'm glad we chose such a light topic for today's show. But let's be honest, it is actually one that is incredibly important because as I always say, we just need to be educated. You don't have to be in a position where you're even thinking about a divorce to know what you need to know if you were ever in that position or what you need to know to hold a hand of a friend who's potentially going through that situation. So, divorce does impact individuals

in super substantial ways financially and so this is why we are talking about this today. So Georgia, it also directly affects more than 100,000 Australians each and every single year so it is not an uncommon thing for people to be going through. Obviously, every single divorce will vary and the financial ramifications of it for everyone will alter but today I really want to provide the top line info of what we need to be looking out for and how we can put ourselves first especially because most of our listeners Georgia are actually women so to kick us off I'll talk really quickly about an amicable divorce which is settled out of court via mediation and it all runs pretty smoothly so Georgia an amicable divorce is when both parties are in

agreeance they kind of come to the table and say hey do you want a divorce and the other party says yeah I'm so glad you asked I'm here for that too and they actually separate in a way that has no conflict involved in it at all so you're you know still friends or you're maybe not friends but you're still, you know, okay with each other and you just want the relationship over. You're happy to negotiate on things like property or houses or even if you don't have kids, just come to a conclusion around what that means. So, whilst you might think that that's the cheap way out of it, Georgia, Fadan Shevket, who also spoke to Finder recently, has said that this would cost around $5,000 to $8,000 and that's because there's no divorce lawyers involved and it would be

relatively painless. This is actually the scenario that most Australian families go through and it is only a small percentage of divorces that go to court. So I do really want to call that out early on because we're not talking about every single divorce that happens because more often than not when you decide to get a divorce you might not be happy with the other person or something has happened but you usually come to some level of agreement between the two parties so that you can actually just settle things and go okay well we've argued about it but now here's the outcome. It's often a very small amount of people who end up in court or end up stringing divorces out for numbers of years, which, you know, some large expenses obviously come into play there. So, also, according to TBA law in Australia, we can expect divorces to, on average, cost us between $15,000 to $20,000, which is, according to them, quite reasonable.

I don't know how I feel about that, Georgia. That's a lot of money. Yeah, exactly. And this cost actually covers the initial negotiations, initiating court proceedings, affidavits, lawyer costs and mediation and court filing fees and everything that's associated with that. So unfortunately, this can absolutely skyrocket if things aren't amicable between both parties. So if you're in disagreement about who gets the kids or who gets the dog or who gets what

house or even if it's just some savings that you're fighting over, this can absolutely skyrocket the second you get any lawyer involved because, Georgia, on average, a lawyer costs hundreds of dollars per hour to engage. So, this is the basis of the court system fees if you go down that road for divorce. So, I think that it's important to just be aware. We're not just saying, take them to court. We're saying, okay, well, that's actually a really big financial undertaking for both parties. However, the financial impacts of divorce go far beyond just the divorce itself and there are lots of elements we need to discuss and consider and actually take into consideration.

Tell me a little bit more about process B. So, Georgia, the main financial impact we actually need to be really wary of when it comes to divorce is that the whole process can quite dramatically reduce our savings and our assets. It can actually tamper with our superannuation. It can impact our ability to afford a home once the divorce has actually settled, which is quite scary if we think about it.

Then there are so many other personal costs that we will touch on too in this conversation like the cost of therapy if it's required like let's be honest if you have been living with somebody regardless of how amicable your divorce is I think it's a really great idea to go and see someone and talk that through because regardless of what you say or how amicable it is that is a traumatic situation that you are going through no matter how amicable it is and I think that that's really important to point out and I also think it's a really strong thing for you to do and that's a complete side note but I do think it's really important to talk about that because there are so many other costs associated with the

divorce that aren't just like okay well I lost half my savings because my partner took it so other things like spousal support that could exist so spousal support is where you have to pay your partner some money so that they can live their life because they got used to a certain type of lifestyle or they're unable to support themselves immediately after a breakup and for some people that can last for a really long time or that can last for a really short period of time until they get back on their feet. And there's other things like child support that you would have to pay as well if you are separating with a partner and have children involved. It's generally cheaper to live as a duo than a solo. And this is why generally as young people, we have housemates and we live

with other people and sometimes we share the bills and put the rent together. I think it's really important to take that into consideration that when you get a divorce, life usually gets a bit more expensive. And more often than not, if you're getting a divorce, you aren't in the mind frame where having a housemate is normal to you. Having a housemate might be something that you go, no, Victoria, like I'm not going to go get a housemate because I've lived on my own or I've lived with my partner for the last five, 10 years. I can't do it. I need to just get my own space. So more often than not, your cost of living increases once you divorce as an individual. So we're not saying it's going to be like double but as a solo person you are going to be spending a

little bit more money. You guys already know how passionate I am about future you and making sure that they are put in the best possible position so I think it's really important to note that according to a recent Australian study superannuation balances are significantly lower for divorced parents than they are for their married counterparts and the stat is that divorced mothers have 68% less super than married mums. And similarly, divorced fathers between the ages of 45 and 64, according to this study, Georgia, have 60% less super than married dads five years after their relationships have ended. Why is that? Just because it's split? It could be split. It could be so many different things. I think it's really important to note that

more often than not, if you're a single mum and you've been divorced, you've probably gone through a very large period of your life where you are not generating an income and contributing to your super. And I think that's then a completely different podcast topic that I really want to discuss as well. And that's, should your partner ever contribute to your superannuation? Which is crazy to think about, but also makes a lot of sense if you are both working towards financial freedom and being equitable and being on the same page. So I think it's just really interesting to know these stats and be educated about what's going on. I also think it's really important to note in every state in Australia, superannuation is seen as a joint asset except for in WA,

where if you get a divorce and your partner has $300,000 in their superannuation account and you are leaving them and whatever is going on, you don't actually have access to that. That is one thing that terrifies me because you guys have been working together and a relationship in my eyes, and this is very personal opinion now, relationship in my eyes is about partnership. And if you are a stay-at-home mom, you are doing so much work, you just don't have a salary for that. And I think that you are absolutely well and truly contributing. So for then the relationship to dissolve and the other party be significantly financially benefited, but you being disadvantaged is just not fair. So, I think that we need to start talking about this and I think that that's

a really important stat to know because you might just assume that it's an asset that, you know, if we get a divorce, you'll be able to access, whereas if you live in WA, that's not the case at all. Georgia, in that same report, it also found that home ownership was a huge challenge for divorced parents with 40% of divorced mothers and 32% of divorced fathers still renting five years after their marriage has ended. I think we can obviously see that this is putting people in a position where they are disadvantaged and they're not having the same opportunity that they would have had as much as we can look at it pragmatically and go, okay, Georgia, well, they had a dual income. Fantastic. But also, we don't ever want to put you in a situation

where you would be disadvantaged if you decided to leave a situation that was no longer serving you. And we know that relationships often keep continuing because of financial reasons. So people might not leave their relationship because they know this is going to happen. So if we can have these conversations earlier and we can have these conversations so we're all on the same page always, we won't ever be in a situation where we are in a relationship because we know it's financially beneficial. And I just feel like we deserve that. We deserve to be in a position where we can make a choice that is not a financial choice.

all of that fluffy stuff about following our heart. I just feel like mental health is equally important to financial health. I think another point to note, Victoria, is that the emotional toll and the heartache of divorce can mean that people are just wanting to get it over with as soon as possible, just rushing through it, not really thinking through their options. Would you say that that is something we need to be mindful of? Absolutely. I do feel like a lot of people rush into a divorce. And I'm not saying that's a bad thing. I mean, I've never been through a divorce, so I can't say, hey, here's what I would do. This is how it would pan out. I've been through relationship breakdowns. I've been through, you know, separating from a partner who I lived with,

which was absolutely heartbreaking. But at the same time, I feel like I also have a lot of experience working with my clients who have gone through divorce. And I think that if you're in a position where you are thinking about this, the best thing you can do is get advice before you let your partner know that that's the case. I think that that is the number one thing that I know has changed the trajectory of my client's ability to have an amicable divorce. We're not saying go to a lawyer and then let your partner know that you're divorcing them via the lawyer. I think it's go to your financial advisor, go see a counselor, go and seek the help of a lawyer for an hour just to understand the process properly so that if this is something that is going to happen,

you're in a position where you actually know what's going on. You're not pulling a trigger and not knowing where you're going to land. And I think that that's a really important part of this. It's not because you're, and we've done an episode, Georgia, on financial abuse. Absolutely not because you're in that situation. It's so that you are empowered and have clarity. And at a time when you don't have heaps of certainty, that is going to make you feel a whole heap more secure. So just get some advice, know what the process is, understand what's going on. But then from a financial point of view, before you even do anything, make sure that you know your financial situation.

So if your partner and you share bank accounts, make sure that you know where all of your money is and what is going on. If you have joint assets, make sure that you've got those listed in a place that is easily accessible. And I'm not saying this is because everything's going to go badly, but you need to be in a position that if that happened you go okay well you know I already had all the information I needed and you're not arguing over statements and trying to find where things are and we discussed this in the financial abuse episode which I think was a really impactful episode that helped us put

ourselves in positions where you know if we were experiencing that we knew what to do but also we knew the signs of that and how to protect ourselves in the best possible way so I think a good family lawyer is someone that you can reach out to to say, hey, let me know what the process is. How do I make this as easy as possible? And they will give you the expertise because you can be proactive instead of reactive to the situation. And more often than not, you've probably been thinking about this for a while, let's be honest. It's not a, ah, I decided last week I would like a divorce. Don't know where we're going to land. I'll just let them know. So, I think that it's really important to just be prepared and be in a situation where you are educated. So seeing a lawyer and

seeing a financial advisor are potentially quite expensive choices for some people, but you've stressed the importance. Are there other places we can go that are more affordable or free? Georgia, that is a really good point. And I think that if you're in a position where you are able to seek the advice of a lawyer or a financial advisor, that is really privileged. That is a great position to be in but if you are not in that position there are so many free resources and we'll put a list in the show notes for everybody in case you do want to access these just so you can familiarize yourself with the process or you know if you're going through something you're like victoria this is exactly what i've needed i hope that that can be of help to you legal aid is a

really good place to start because they can help you seek out compassionate lawyers or even lawyers who work pro bono if you're in that situation i think counseling or financial counseling australia is a really good resource as well because they will help you get through that situation and obviously when you're talking to these people it's not because you want to personally understand how to get through that. I think therapy is another thing that you should be looking into but Financial Counselling Australia is really great. The Debt Free Hotline is also a place to go as well which is really good and I'll pop that in the show notes. There are also other services like Divorce counseling services. I actually have a friend, Tanya Somerton. Hi, if you're listening. She runs

a company called Divorce Angel and she actually has her own podcast on getting a divorce. And she guides you through the process if you're worried or confused about where to start with having a successful divorce. And she's really trying to reframe divorce, which I think is incredible. She's very empowering. She wants to hold your hand through the whole process so that it can be amicable and you don't have to get lawyers involved. So if you're at a stage where you're like Victoria I need some advice like I can't afford a lawyer but like I've got some money to spend I think that something like divorce angel by Tanya Somerton would be a really good thing that's absolutely not a paid plug by the way I just think that what she does is honestly so

beautiful and you know it's reframing the way that we do get divorced and she's in a position where she is actually helping people but not many of us knew a service like this existed before now I bet I didn't. Exactly. Is that a woman's only thing or is that everyone? No, it's for everybody. So these services are definitely not just for females. At the end of the day, males experience very similar outcomes and experience very similar disadvantage, obviously not to the same level that historically females have. But I think that we really need to open up the conversation. Divorce doesn't just impact females, it impacts males as well. Yes, as a woman, we are significantly more likely to experience disadvantage, but we'd be naive to say that it is a female-only problem.

Well, this kind of leads into my next question, Victoria, because women are statistically worse off than men post-divorce. So, why? Why is that? There are so many reasons, Georgia, and every relationship is different. Every relationship breakdown is different. So, I can't speak for everybody, but more often than not, a female is usually the primary caregiver in a relationship, especially if children are involved. And I think that the sacrifices women make are not necessarily sacrifices they're making on purpose for financial reasons. So more often than not, women will decide, okay, well, I just want to work part-time

in admin because my husband works crazy hours and I'd love to be able to pick the kids up from school at 3.15 every single day. And I think that that is a lifestyle choice, but that's a choice that that woman has made for her family. So more often than not, if that's the experience she's had for the last 10 or 15 years of her life. She has far less earning potential coming out of that relationship, which therefore disadvantages her. It's a really nice sacrifice you're making for your family, but I think we really need to think about the way we divide these tasks and actually choose our careers when we have

a family and the sacrifices we're making. Because if the relationship doesn't work out, which we don't want to be betting on that. We don't want to say, hey, I would love to get another job because like if this doesn't work out in our happily married relationship, I just don't want to be disadvantaged. But I think we really need to talk about it because I think unknowingly we as women make sacrifices for reasons that make sense at the time, whether that is our family or our friends, also our partner can work longer hours. We end up choosing things that put us in disadvantaged positions over the long term. It's not one decision. It's not she decided to stay home and therefore she was in a disadvantaged position when they broke up. It's the small

things. It's choosing to have a child and staying home with that child for a couple of years and then that leading into wanting to work part-time because you want to put your family first and not going and chasing that career or that dream that you had and being in a position where you're not actually progressing your career in the same way that your partner is, that puts you at a significant disadvantage. Now, if you're in a relationship for the rest of ever, that's fantastic because you have this really great income. But I think that more often than not, women are not getting the recognition they need for the sacrifices they are making that actually propel their partner's careers. And I think we need to probably have a really good discussion and just open the

conversation up about that because women are making these sacrifices and they aren't just financial. They're about career success. They're about family. They're about friends. So, Georgia, whilst divorce has little impact on a man's employment status, which is quite scary, many female divorcees do end up returning to work, which is fantastic, but they end up receiving 10% less remuneration than a married woman. Why do you think that is? Is that just because they're not perceived as being as skilled anymore because they've been out of the game? Potentially. It's likely because they were perceived as having been out of the game and are not as vital as an employee as they would have been had they not gone on a break, which

is heartbreaking georgia another really interesting stat from relationships australia found that women are less likely than men to remarry after divorce so they are relying on that one income rather than reaping the benefits of having two streams of income like a lot of men might jump back into a relationship get married and then have a dual income again some women or actually from her research most women don't actually remarry after divorce which is interesting i think also they're not going to be jumping into CEO positions or those really high-powered positions because they have been out of the game for that long as well, right? They're not going to be earning a killing straight away. Absolutely. And I think it's really upsetting to see as well because I feel like

women have so much to offer. And even if you haven't, quote, been working, you've been learning relationship management, you've been bringing children up, you've been learning so much and doing so much and I just feel like those skills can be super transferable into a workplace and workplaces in general need to be a little bit more open to this discussion and you know bringing people in and saying cool you're really skilled like look at the dedication you've had over the last 18 years like look how crazy that is you've you know literally developed people how cool is that and I think that another stat that I want to throw in here before you know you ask another the question, which I can see you're excited to do, is that 63% of single mothers receive

a government pension as their principal source of income. Do you think that means that they're not working? Georgia, it absolutely could mean that, but a lot of single mothers actually receive a government pension because they're not able to find employment or the fact that childcare is far more expensive than what the government pension actually provides them with or what a part-time salary is actually going to pay them. Childcare around Australia is insanely expensive. So I think that if you are then in a single income family, going back to work for some women just doesn't make any financial sense because they end up, you know, actually backwards. Childcare each day can be up to $250 a day for a child here in Melbourne. Is that true? Yes, it is. And it's insane. So it

makes sense that that might be a reason why women are saying, well, I don't want to go back to work. it makes absolutely no sense I'll stay home with my family look after them I get to spend time with my kids I love them because it's actually just too expensive for them to go back to work which also shoots ourselves in the foot because we don't actually get that career experience that we would love to say we had should we want to then go get another job once they're back in school so I feel like there is just so much here that plays into it and we as a whole need to understand a little bit more about it. Do you deal with many divorces in your line of work? Look, I can't say I've dealt with heaps and heaps and heaps of them, but I have held the hand of a number of clients going

through this situation and it's empowering at the same time as being, you know, a little bit confusing for them. I feel like once they have decided that that's the case, I've worked with clients where it's really straightforward and their partner and them just separate assets and it's very, very straightforward. Whereas I also have a couple of clients who their divorces have drawn out over a number of years because they can't come to a settlement and someone wants one thing, but the other person doesn't want them to have it or, you know, child support can't be agreed upon or whatever it is. So yes, I have dealt with it in my line of work and I just feel like what we need to be mindful of is putting ourselves first and making sure that we are

actually looking after ourselves. Sometimes, and I know that this is not what a lot of people going through this are going to want to hear, sometimes the fight is not worth it. Sometimes it is better to just say, you know what, clean slate for my mental health, for my physical health, for my family. I'm just calling it a day. We're not going to argue over this $10,000. I think sometimes people do get really wrapped up into he said, she said, she wants, he wants, they want, whatever that looks like and they actually forget about their mental health and this can drag on for years I can imagine like you're not breaking up with them because they're the best like you're probably a little bit sick of them yeah you're probably a little bit sick of them you're probably

a little bit bitter and I just feel like we need to sit back and think about this ourselves and go is this actually serving me like do I need this please don't get me wrong there are definitely fights worth having but sometimes we really need to have a little bit of a think and I've sought through this with clients before where we go, is this worth it? Do we want this to drag on for another 12 months or do you want your headspace back? Do you want this to be the thing that you think about each and every single day or do we want to just bite the bullet and find a way that we can turbocharge your income and actually get you to a point where you can just generate that back and go, you know what, that was a really bad investment. Victoria, would you say that a way of

avoiding all of this angst is to get a little prenup set up in our relationships. Is that a thing? I mean, if you were in America, that would be a really good idea to set up a prenup. But given we're in Australia, we don't actually have prenups. Really? No, you can see a lawyer and you can actually have what we call here a binding financial agreement established, which I absolutely well and truly would recommend. They are also referred to as BFAs, which I think is really important but yes I think that a common misconception here in Australia is that prenups actually exist in the same way that we think that credit scores are really important and actually are going to impact our entire lives that's an American thing I think that we really

need to be in a situation where we understand what's going on and a BFA is something that you could implement that could put you in a position where should your relationship break down you will know how to divide up those assets and resources if it comes to that. And I actually think that this is something that if you are moving in with anyone, Georgia, you should be thinking about. I don't care how old you are. I don't care what situation that is. If you're in a situation where you are moving in with a partner, you should be comfortable enough to talk about your assets. And if you're not comfortable enough to talk about your assets with a partner that you're literally moving in with, I think you need to have a think about how comfortable you are to

actually moving with them. So a binding financial agreement, I think is actually a really beautiful thing. And I know that this sounds really lame, but the idea that while you two have an incredible relationship, like Georgia, I want to move in with you. We are so in love. We are so excited to do this. That is the time that we should be having the discussion about what happens if this doesn't work out. Because I think that in that moment and in that situation in life, you are most likely to be thinking the straightest about what happens if we break up I want the best for you Georgia I want you to be as equitable as me and if you can sit down and create a binding financial agreement together that says okay well if we go our separate ways I want the best for you because I'm so in

love with you and vice versa you actually come to an agreement that once everything hits the fan like let's be honest divorce is messy like people get bitter it's really nice to have a document to fall back on and say, hey, this is the document we put together when we just wanted the best for each other, truly and honestly, and this is what we are going to do. So I think that is really important to do that. Regardless of who you're moving in with or how old you are, I think that it is a really nice thing to go through. I've done this with my partner and I think that it is really important to do it with any partner that you're considering living with or pursuing a very significant relationship with. It sounds kind of unromantic though, no? Look, it is totally

unromantic, but I do think that we need to be a little bit more comfortable with the unromantic because it creates a more stable relationship. Knowing where you stand all the time is really important. Now, I don't want you entering relationships with the idea in your head that it might not work out. Hopefully, this binding financial agreement that you write is the biggest waste of time you ever go through because you end up in a position where you never use it and it gets put in a drawer somewhere somehow and years from now someone's cleaning out your drawers because you're no longer around they're wow like this exists yeah like that's how I want the agreement to exist I don't want people going into relationships with the expectation that

they won't work out but I do think that we need to be putting ourselves first because if things start to get rocky and we start to feel really uncomfortable the best thing that we can do is know what the plan is and how do you know how the other person is going to react if you haven't discussed it before so it's like a little bit of insurance for the relationship absolutely and i think that it's really important to see it that way i genuinely think it is a really good thing i know it's unromantic you're not going to be like hey babe let's go on a date night and talk about a binding financial agreement that kind of sounds like something you would do though yeah look me personally but definitely not other people but you are right they are unromantic

but I think that it is really important to have this discussion with your partner and what that actually means and how that's actually going to work because it's such a powerful position to be in and it will just make you as a couple stronger you think about your partner and you're like they will never do the wrong thing by me I love them they love me but you know you fast forward 40 years down the track you bloody hate tomo your partner i don't know why i chose tomo as a name but you know things can get nasty and we can underestimate that when we're in the the throes of love in the early stages right which is exactly why i think that while you are in the throes of love and you are so loved up and want the best for each other that is the best time to create

an agreement where you are both putting each other first and i think that that is really important to take into consideration because by the time that you are getting a divorce more often than not something has triggered it let's be honest and I think that you know when you're under financial stress and when you are under relationship stress and maybe there's someone else involved things get really bitter and I think that you need to just be really pragmatic about it okay well this is what we agreed upon and I know couples who have binding financial agreements that differ depending on what the outcome of the relationship is what do you mean so if some partner cheats a different set of outcomes will ensue. So I think it's super interesting and you can talk

to a lawyer about what you could include in yours or what you're most comfortable with. But I know that a lot of couples, you know, you can get a stock standard binding financial agreement, but you can also get a really customized one depending on what you want. Do you have to do it as well at like the start of the relationship or when you're moving in or before you get married? Or can you do it like five years into your marriage? You can do it whenever, but I do feel like that if you're like 10 years into a marriage and then turning, hey, honey, I was thinking about a binding financial agreement. Little bit suspicious.

Little bit suspicious, but also maybe a little bit late because you already have joint assets and you already are in a position where let's say you go to court and things happen, like the start point is 50-50 for the court and then it goes back and forth from there. I'm by no means a lawyer, so this is by no means legal advice, but I think that it is really important to get it up front from the beginning. so that you are on your own standing but also georgia i think that because we are here trying to empower young women to get their stuff together and be really financially literate on their road we're going to see hopefully like let's cross our fingers so many more women going into relationships

with assets that i genuinely think should be protected and the bfa is something that is going to help you say hey cool so if we're going to go live together this share portfolio that i have been growing for myself. If we break up, you don't get any of that. And I want you to sign that you're very comfortable with that because you didn't work your butt off for someone else to take half of your stuff. Okay. So BFAs slash prenups, if you will, are obviously a really good idea. But what should we be doing if we don't have a prenup slash BFA? How can we prepare ourselves for a divorce? We want prenups. We want prenups. Yeah. Yeah. No, maybe that can be out. But before you do anything, I think seek advice. I already said this, go and get some

advice because if you've got a lawyer, they should be able to figure out the best situation of exit for you. As I said, we want to be really prepared and not reactive to the situation. We actually want to plan our exit and make sure that we are utilizing the free resources that are available, some of which, as we said, we're going to leave in the show notes for you. So you can make a plan that works best for you and you can actually stage this exit in the best way that puts you both in the best possible position it also gives you time to start utilizing free resources and educate yourself on what's going to happen and make a plan and this could be from small things like okay like I want to start thinking about this like where am I going to move like which

is obviously a big thing but also about assets more holistically and actually understanding what's going on and as I said there are so many other resources that are available George that I'm just going to link in the show notes so I think that those are things that we need to have a look at and I'd also like to say and I've said this about financial advisors having a good financial advisor is obviously really important it is also very much like having a good doctor like if you don't feel comfortable with your doctor to tell them what's up or if there's a problem how can they actually help you solve that issue which is what I say to all my clients in their first session i'll always say literally be like hey i have loved this session but if i'm not

the right fit for you that's totally okay i need you to be really comfortable with me the same thing goes for divorce lawyers don't just choose the first one you meet because you're flustered and you're worried if you do not feel like that is the right fit shop around go meet other people understand who's there maybe talk to a friend who has been through a divorce and get some advice and put yourself in a position where you can actually see yourself working with that lawyer if you need one because you're going to be paying them money. You're probably going to be paying them a lot of money and it's really important to get along with them as they're the ones that are going to be engaging in the divorce and they need to understand you and you need to feel like they're

putting you first. Georgia, another thing I want to note here before you try and wrap me up to get to the listener question is that if there are kids involved, which likely there will be given that 47.3% of divorces involve children, according to our friends at the ABS. It is a really good idea to strive to settle sooner rather than later. And this is not just personal advice. This is advice that I think every divorce lawyer would agree with me on. This avoids the kids being used as a negotiation tool. And I know that that sounds really savage and really mean, but we all know it has happened. We all know about joint custody discussions and arguments that people have been through. Sometimes one party will try and ask for a 50-50 custody settle if it means that they will

have to pay less child support, et cetera. But if you settle on the financials early, then this is far less likely to occur. So I think that it's really important to do this. And then also I want to stress, speak to a financial advisor. If you've just gone through a divorce, it is really important to make sure that you are getting back on track ASAP and you are putting yourself first and you are putting future you first because you don't want to be disadvantaged long-term. You know what? Talk to your friends as well. Create a network. Be open. Be honest that you're going through something that's pretty challenging and you'll be surprised at the people that show up. Just ensure that you feel supported through the whole process. Yeah. So, this conversation has absolutely

not covered everything, but I think we've had a really good chat about the financial aspects of divorce. Obviously, it's an incredibly emotionally taxing time and there'd be a plethora of podcasts and resources out there for people who are going through divorce and need that support so we'll probably i don't know maybe we could create a blog post and yeah absolutely i think that's a great idea but hopefully this chat has helped you out in some way today hi there you've reached the she's on the money mailbox do you have a money problem you want help solving do you have a money dilemma you just want to chat about victoria is here to help every week we'll be playing your questions to help make sense of a money mess you may have found yourself

in. Make a quick recording on your phone and send it through to podcast at chooseonthemoney.com.au and you might even find yourself on the show. But for now, here's today's listener question. Hello. So I'm just checking in because I've been living with my partner for 10 years now. We're not married, but we do have a shared mortgage and we've decided it's time to move on as it's just not working anymore. Fortunately, we are on good terms, which will make the process easier but i was wondering if you had any tips on how i can set myself up financially for the future what is the deal with this one victoria well it is interesting because as she's mentioned she's not married but in australia de facto partners are treated the same as married partners it's

the rules and regulations that go around that and they are treated very very similarly to marriages you just don't have to go through the court proceedings of getting an official divorce But you do need to register that you're no longer in a relationship together because you will be nominated as a de facto partner and that could be on your tax return, it could be through birth, deaths and marriages, it could be through anything. But if you've lived with your partner for more than two years, as our listener has obviously, then you are actually classified as de facto and you will be financially intertwined. And I think that that's a really important point because two years creeps up pretty quickly. like i know that i didn't in my personal relationship didn't realize how quickly it creeped up absolutely and i think that it's really important to know so since march 2009 de facto and married couples are treated exactly the same as i said there is no difference it is somewhat recent

so i know that some people will be getting advice from parents or family or friends that say no no no de facto isn't married no nowadays and i know that 2009 although it doesn't feel that long ago it's totally long ago um is actually exactly the same so your de facto has two years from separation to make any claims on your assets if they can establish one and i think that that's really important as well so you might be amicable but for two years after you separate they can actually come back and go hey georgia actually about that um and they have a legal standing to do that which is quite scary because often there's a period of time where people are waiting out that two years and going oh can they can't they I don't know if they're going to ask for it or not

so there's a couple of rules around this so if they meet these following criteria they could potentially make a claim on your assets so the first one is that you live together as a couple on a quote genuine domestic basis for two years obviously they've met that you have a child together or they make a substantial contribution on your property and there would be serious injustice if they were not permitted to make a claim so that could be you moved in with a partner who owned a property and then over the last 10 years, you guys have renovated it together. Albeit it was somebody else's property to begin with, you kind of start to get some eligibility to make a claim on that. So I think it's really, really important to take these things into

consideration. So for our listener, I would suggest just like I would advise any client heading into a divorce, do your research, go and see a family lawyer, plan it, stage it, understand it and utilize some of the aforementioned free resources and advice to figure out how you can best set yourself up for a positive experience in the breakup of a relationship. Now, as she said, they're amicable, but this sometimes isn't always the case forever. So I think just getting it done ASAP, but also getting good advice along the way and making sure you're in a financially stable position as soon as you can is really important. A financial advisor, family lawyer, we can help you here. But by looking at all of your assets and projected

future wealth, you'll be able to put all your cards on the table and really clarify it for us and them. Because at the end of the day, I can't help if I don't know what's going on. Now for the fun stuff. What good would a money podcast be without the Furby bits? It's time for Money Diaries. Hi, I'm 25 and I'm adjusting to the real world and this is my money diary. We started off by asking her about her attitude to money. I grew up in sort of an average household. My mum was a stay-at-home mum for majority of my life and so my parents were living off a single income and so I think I've developed quite good money habits because we had to sort of ration to be able to live on that single income for my mum to be able to raise my

brother and I. So we never had a lot but what we what my dad sort of brought into the family we really had to make it go far so up until the age of 23 when I moved to Melbourne I was super good at saving yeah I had a job all throughout university and I even bought my first car all by myself and then I bought my second car which was about 15 grand I managed to buy that outright so I had a really good relationship with money early on which is kind of funny because it's like the opposite to most people. Normally they get better with money, but I kind of got worse with it. When I moved to Melbourne, I found it extremely hard to adjust to paying rent and paying bills. And also in a new city, you want to make new friends and things. So I was, you know,

spending a lot going out and, you know, I moved over here with a suitcase of stuff. And so to kind of build my life, I had to spend a lot of my savings. So that really took a hit. But now that I'm 25. I've sort of been back on the savings bandwagon for about probably six to 12 months now. So yeah. Let's get into the juicy stuff. How much does she earn and how much is sitting in her bank account right now? So for work, I'm a business administrator and I'm currently on 62K plus super. So I've got quite a few bank accounts. In my main house savings, I currently have $12,000. I've got an emergency fund, which is $2,000. And then I've just got a few hundred in the other various accounts like bills and things like that. So I'd say all up,

I've probably got about $15,000. And what exactly happens to that money after it's deposited into her account? I'm trying to get used to being paid monthly for the first time, which is actually quite difficult. So what I've done is I've created a bunch of bank accounts. So the first thing that I do is transfer money into my savings account. And then from there, I've got all little individual accounts, like a bills account. I've got one for my cat just for expenses for that. I've got a short-term savings account. So I'm really trying to divide my money up because by the end of the month, I kind of find that I'm running quite low on funds. So just dividing it up kind of makes it easier for me to grab what I

need. How does she feel about investing? Does she invest? And if so, how? I have invested and I do invest. I was very fortunate that when I was about 21, I inherited $10,000 from a passing of a family member. And I was in a really good position that the initial instinct would be to spend that money. But speaking to my dad, he said, you should invest. And I had no idea about investing. I was only 21 years old. So he really helped me to find my path in where to invest that money. And so I split the money into two lots, so $5,000, and I invested $5,000 into a managed fund and $5,000 into shares, like the stock market. And then since then, I really haven't invested too much just because I have fallen off the wagon. But about 12 months ago, I started up a raise

account. And what I'm doing is I'm sort of accumulating about $1,000. And then once I get to that, then I'm going to be putting that into buying shares. So I've got about $900 at the moment. So I'm not too far off creating my first parcel of $1,000. What about debt? Let's learn a little bit more about her credit card and personal loans. So I've never had a credit card in my life. However, I did go to university, so I do have about a $38,000 Hex debt. And does she have any good money habits that she's especially proud of? So I've got two. Firstly, I sell all my unwanted things on Marketplace. As soon as there's something that I don't use, I put it straight on Facebook Marketplace and it usually sells quite quickly if you put it at a decent price.

And secondly, I bring my lunch to work easily four out of five days a week. I maybe treat myself like once a week, once a fortnight to a lunch, a takeaway lunch. But otherwise, I'm bringing my lunch every day. And what about her worst money habit? I spend a lot of money on rent. So I currently spend almost $400 a week on rent because I do live by myself in Melbourne. So that's something that I kind of value. and so I do see you know the value in putting my money into that because I really value my

alone time and my space um another thing is I also buy a lot of plants and home decor which is really bad so what's today's money diarist actually saving for what's her big money goal I think for me I definitely want to purchase a house I've lived in a few places now and I just would really love to be able to renovate a place I'm kind of in the design industry so that kind of means a lot to me to be able to have your own space that you can create as your own and obviously renting doesn't allow that something that kind of makes me fall off the bandwagon a bit is the idea of house prices increasing and my savings not being able to keep up with that you know the other day I sort of worked out how long it would take me to afford

a deposit on even just a one-bedroom home apartment you know in the city and for me that's going to take at least five years and that kind of really puts me off a bit and that kind of knocks me back and I sort of tend to start from scratch from there and also I guess to do with that as well is seeing people around me you know my brother and you know comparing myself to people who are currently purchasing their first property and you know we're the same age and I kind of think why aren't I in that stage as well so I think definitely the idea of purchasing a property is high on my list, but I do feel discouraged at times because I feel like I can't keep up with people around me. So how would today's money diarist rate her own relationship with money?

So I'd say about a year ago, if you had asked me that, I would have said probably a C. But I think at the moment I'm probably an A minus. I feel like I'm kind of across everything in terms of, you know, I've got my savings and I've invested a bit, but I definitely have room to improve. particularly around my mindset around money and, you know, not comparing myself to other people so much. But, yeah, I'd say an A-. Victoria, what did you make of this week's money diarist? I really liked it.

I felt like she was really harsh on herself, though. I feel like a broken record. I say that everyone feels harsh on themselves. You do. That's okay. But she said that she compared herself to her friends a lot and didn't feel like she had it together. And then she's like, oh, and by the way, I've got this in my savings and I've, you know, structured this and I even have an account for my cat,

which obviously I love. But I just felt like she had it together so much more than other people do and so much more than she's giving herself credit for. I think I'm a similar age. I just turned 26 and I have this conversation with my girlfriends all the time. It's like, God, we are old now. We are old and we are not where we thought we would be. Life is really hard.

It's really expensive. She said that she spends – You're not old, by the way. I'm just going to jump in there and be like, are you kidding? I'm 26. I'm 29 now and that doesn't feel old either. What do you mean halfway to 52? That's halfway, girl.

Yeah, okay, that is true. Calm down. But what I'm saying is that we're all going through the same thing. But she did mention that she spends $400 a week on rent, which in Melbourne I think that's really expensive, but she did say it aligns to her values. She wants to live alone. I get that.

I've lived with some salty housemates in the past, so I get it. I get it. Guys, she lived with my little sister for a while. So I don't know what that means. Don't read too much into it. But I do agree and I think that that's a decision that she has made consciously and that's why I like it. As you know, Georgia, I have absolutely no issue with what you spend.

It's that you are spending it not just in line with your values but consciously so that you are not just making unconscious decisions and somehow you've ended up spending $400 on rent. She was quite clear that was something that she wanted to spend on and she's making up for it in other places. And I think that that's great. If you want to do that, you do you. I loved that she also said she spends a lot of money on her plants and home decor, which

I also really responded to. I just felt like she was my people. Plants and a cat fund. She really was. Does it get any better? Maybe it was my money diary. Guys, no. One last little question for you before we wrap up.

The investing of the inheritance. Did you think that that was a good idea? I thought that was a great idea. Yeah, and I really like that she got that guidance from her dad early on. I really liked that she also clearly valued it as well and she didn't know. And I really liked that she said that she's also kind of diversified a little bit further and she's recently got a micro-investing platform raised, which, you know, as a financial advisor, I can't say, oh, it's incredible, it's this, it's that.

But I know lots of people in our community use it and really enjoy it and we do have a She's On The Money code for it if you guys are into it. We absolutely do. okay so yeah i think in sum she's probably being a little bit too harsh on herself and she's actually killing it yay yay all righty that is all we have time for today guys but before we head off let's quickly wrap the boring but important stuff the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make

an investment or financial decision and stress less we promise victoria divine is an authorized representative of australia pacific funds management proprietary limited abn 34132463257 afsl 339151 and as always a massive shout out to our audio lord ryan john for putting together today's podcast we would love it if you joined our facebook group where our community shares money tips and tricks every single day free of judgment so she's on the money on facebook and join us if facebook's not your thing or you want us on multiple platforms you can also find us on Instagram we're at she's on the money AUS and what else happened recently oh yes we're also on YouTube now guys too so search she's on the money AUS on YouTube and you'll find some fun

fun videos if you haven't heard enough of us on the podcast all right we'll see you next week see you next week guys bye