Divorce is one of the most challenges life events, especially as we get older. Many of us prioritise our family commitments and children over financial independence, and when we go through a divorce, we find it often so emotional and overwhelming, that we fail to plan and end up in a much worse financial position.
If you are considering separating in 2025, here are three critical mistakes to avoid:
1. Not taking control of your finances
Many women rely on their spouses to manage household finances. When the marriage ends, they often feel lost, overwhelmed, and anxious about money. This lack of confidence often leads to poor financial decisions, unnecessary stress, and a fear of the unknown.
Real-Life Example:
Karen, 50, always trusted her husband to handle their finances. When their marriage ended, she realised she didn’t know how much they had in savings or debt, how to budget or what was in her superannuation account. She felt powerless and panicked, assuming she would never be financially secure. Out of fear, she made rushed financial decisions that weren’t in her best interest.
How to avoid this mistake:
· Educate yourself – learn as much as possible about your combined financial situation before starting any divorce proceedings. Remember 4 pillars of wealth: income (what your earn from employment or investments, expenses (what you spend on your lifestyle and investments), assets (what you own) and liabilities (what you owe)
· Get organised – gather financial documents (bank statements, tax returns, superannuation statements etc) and online access to accounts
· Seek support – work with a financial adviser to create a divorce plan
2. Not engaging professional help (or not following professional advice)
Many of us hesitate to engage with professionals like family lawyers, financial advisers, divorce coaches due to cost concerns. However, that sometimes leads to costly mistakes that are for more expensive.
Real-Life Example:
Margaret, 55, thought she could handle her divorce without a lawyer to save money. She signed an agreement that seemed fair at the time but later realised she had unknowingly given up her share of her ex-husband’s superannuation. Years later, she struggled financially while her ex enjoyed a comfortable retirement. The money she thought she saved on legal fees ended up costing her a secure future.
How to avoid this mistake:
· Recognise the value of expert advice – A good lawyer will guide you through the process and provide legal advice tailored to your circumstances. A good financial planner will help you understand your financial situation and develop a plan for post-divorce stability.
· Budget for professional fees – this is an investment in your future.
· Avoid DYI agreements or relying on advice from family members and friends – without professional oversight, you might sign away rights you didn’t even know you had.
A well-negotiated divorce agreement will impact your financial security for decades—make sure you get it right.
3. Spending your settlement too quickly
Post divorce life is usually more expensive than anticipated, and emotional spending together with the pressure to create stability for children can result in long term financial struggles.
Real-Life Example:
Lisa, 52, received a lump sum settlement from her divorce. She used most of the money to buy a home, believing it was the safest investment. However, she didn’t leave enough for everyday expenses and unexpected costs. Within a year, her savings were gone. Rising living costs, helping her children financially out of guilt, and unforeseen repairs on her home left her struggling. Without enough income to cover her ongoing expenses, she faced the difficult reality of selling her home to stay afloat.
How to avoid this mistake:
· Balance home ownership with future expenses – while owning a home provides stability, make sure you have enough cash saved away for emergencies and unexpected expenses.
· Create a long term plan – think about your short- and long-term needs and how you are going to maintain your lifestyle in 5, 10, 20 years time
· Seek professional advice – a financial adviser can help you create a plan to manage your settlement funds wisely, ensuring they support you throughout your life and that you don’t risk outliving your money.
In discussions with our clients, we focus on their mindset shift to prepare for an independent future.
· You may make mistakes along the way, but that’s OK – what matters is that you are taking action. Instead of focusing on perfection, focus on progress.
· Take one step at a time and identify the most urgent and important tasks every day.
· Focus on what you can control and influence.
· Seek support from women who have been through divorce and learn from their experiences.
