Divorce is a dreadful event emotionally for everyone involved, but it also has a huge financial impact on Australians due to our family law arrangements.

When it comes to splitting assets, everything can be considered part of the matrimonial asset pool: the home, investments, savings, and even your superannuation.

Data from the Australian Bureau of Statistics (ABS) indicates that around half of all marriages end in divorce with 47,000 divorces granted in Australia each year. When you consider this figure doesn’t include defacto couple break-ups it’s easy to see how many people are impacted by the financial ramifications of relationship breakdowns.

Financial Advice for Divorce

Rebuilding your life financially and emotionally after divorce and relationship breakdown is a difficult task. In addition to the emotional impact, your divorce and separation also has financial ramifications. Whether you were the main income earner in the household, or a stay at home mum, your financial status has changed as a result of the separation and you need to ensure that your assumptions are realistic going forward. To start rebuilding your life you need to start with a budget to ensure that you have an accurate idea about your new cost of living. Many people find that an experienced financial planner can assist them in this rebuilding phase to:

• assess your income and expenses and develop a budget moving forward
• help you to identify your financial goals it is likely that these will have changed now that you are divorced
• formulate a financial plan to help you secure your financial future through appropriate investing and life insurance. This may incorporate any funds received from your financial settlement.

Many people who divorce find that the financial impact can set them back years. This is particularly evident where divorce occurs later in your working life you have less time to rebuild your finances before retirement. By getting the advice of a financial planner experienced in divorce and separation, you can make the most of a difficult situation and start getting your financial life back on track.

For more information about how to rebuild your finances after divorce, download our free ebook Divorce and Separation. In it you’ll find some great information to help you.

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2nd Nov 2008. John Bird and John Fortune on Silly Money satirising the absurdity of the financial crisis.

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Financial Spectrum -
About the Author:

Financial Spectrum is an independently owned financial planning firm based in Sydney Australia. For more information about us and how we can help, visit us at http://www.financialspectrum.com.au

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5 financial tips to keep you ahead of 90% of the population

You are never too young to start financial planning. In order to stay ahead of what I call the “Traditional Spending Curve” (TSC) you need to start planning your future as early as possible – here are 5 steps you can take to stay ahead of the curve and be better off financially than 90% of the population

I think most people will agree that financial planning can be a great tool in helping you to build a nest egg for retirement. The only problem is that most people dont start their financial planning and budgeting until after they graduate from college and get a job. For most people their financial planning consists of a 401k from their employer and maybe a personal IRA on top of that.

You might be saying well there is no point in planning your finances if you are still in school and dont have any finances but that is where it is actually most important. This is where you have the opportunity to get ahead of what I call the Traditional Spending Curve(TSC)which is basically the level of necessary spending you must engage in at any particular time in your life. When you are young it is very low because your parents pay for everything but as you get older it goes up as you start to pay for your own meals, or cell phone bills etc. It takes a substantial leap when you move out and have to pay rent, utilities etc. Naturally the amount you save is inversely proportional to the amount you spend so ideally the more you can save when you are younger when your expenses are lower the better.

When I say stay ahead of the curve what I mean is that if you wait until you are out of college and out on your own and working to start saving then you may have missed the boat already because then your expenses are very high and it is harder to save money for a house. And the biggest problem people run into is that houses often appreciate faster than they are able to save. So they get stuck paying rent and never have enough saved to put down 20% on a house and are always stuck behind the curve.

So here is a list of things you can do to stay ahead of the curve:

1) Get a job while you are in high school and save every penny you can. You may not be earning much but youll find if you have a few thousand in the bank when you get out of high school youll probably be ahead of over 90% of your fellow students (and most adults too!).

2) Drive the cheapest car you can stand. Dont make the mistake a lot of kids make when they take all the money theyve saved and spend it all on a down payment on a car and then they have no more savings and a car payment! If possible try getting by without a car by hitching rides from friends or family or taking the bus, or borrowing a family car from time to time. The money you save can make a huge difference when you get to #5.

3) Get a college education this one is obvious – in this day and age its really not an option anymore its a necessity. According to the US Census Bureau a college graduate will average about $20,000 more per year than someone with just a high school diploma which can translate to about $1,000,000 of extra earnings over a persons lifetime. So get a college degree and more specifically get a degree that will teach you a skill to get a job. Majoring in art might be very interesting to you but it probably wont help you find a very good job. Specific majors include: accounting, engineering, nursing, law etc.

#4 Live at home for a few years after graduation. This may be the hardest one to follow but it is the MOST IMPORTANT. In order to stay ahead of the traditional spending curve you need to save as much as possible when you dont have many expenses. Well, the problem is that youre not really making a lot of money until you get out of college and get a decent job so its hard to save a lot of money. Then when you move out you have a ton of expenses so its still hard to save a lot of money. However, if for example you live at home for a few years after you graduate and get a job then you should be able to save half of your income or more. So if you are a college graduate making about $45,000 a year living at home you should be able to save about $20,000 of that or more annually! In a few short years if you budget wisely then you could have $50-$100,000 saved up and ready for you first and most important major investment.

#5 Buy a House- Hopefully by now youve saved your money you earned in high school and college working part time and saved about $20,000 a year for the last 3 years by living at home with your parents. This is when you buy your starter home. Lets say you are single and making about $50,000 a year. So to be safe you buy a condo or townhouse that is 3 times your gross income or $150,000 and you put down 20% which is $30,000. You are still left over with about $10-20,000 and now you have an asset that will appreciate as you pay it off.

You will be one of very few 25 year olds that has his or her own property with 20% equity and over $10,000 in the bank. As your house value grows so does your equity and your ability to upgrade as you save more and increase your earnings potential.

As youve seen all this was possible because you started planning for your future while you were in high school. If you had waited until you were already out on your own and paying rent it would be much harder to achieve the savings necessary to buy a house. Many people are well into their 30s and still struggling to save enough money to buy a house.

You might be saying this is all fine and dandy but its too late Im already behind the spending curve well you can still improve your finances with financial planning but this article is really geared toward high school students and their parents. This should really be taught in every high school in America but since it isnt its your responsibility to teach it to your children if and when you have them.

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About Author

Alessandro Perilli

I am an Accounting Major at West Chester University. I have also run my own home-based business for several years where I use the same cost cutting practices to stay ahead as I use in my everyday life.

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