Managing Finances After A Break Up Or Divorce

21st February 2019

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Forest trees heading off in two directions

Separation or divorce is a stressful and upsetting time. It also unfortunately negatively impacts any wealth that has built up and any preparations we’ve made for the future. Sometimes the only thing to do is get life back on track by taking control of our income, debts and spending. We can start by taking stock of the day-to-day finances, then work up to tackling longer-term money issues.

Getting started

The first step is to reorganise your finances without your ex-partner. If they took care of the money, you need to work out how things were organised and see if you need to make any changes. Now’s the time to focus on getting set up for the future – this could be a whole new start.

  • Talk to a lawyer: They’ll be able to advise you and help freeze any joint accounts, separate any property held in both names, take legal action if property is held in your partner's name to prevent its sale before final property settlement, and update your will.
  • Set up new bank accounts: It’s time to set up your own bank accounts that only you can access and make sure your pay goes into one of these. You should also change the passwords and PIN numbers on any accounts in your name that your ex may have had access to. This also applies to credit cards and accounts with overdrafts or loan facilities. These need to be addressed so that new debt can’t be created by your ex that you might be obligated to pay back.
  • Check that bills get paid and that automatic payments and debt repayments are made: Bad debts that are in joint names could affect your credit reports. You may need to freeze or close joint store cards or loans until they are transferred to one name. A few months after the break-up, you can check your credit record by getting a copy from each of the credit reporters.
  • Update the rental agreement: If you were renting and your name is on the lease you could be liable for unpaid rent or property damage caused by your partner.
  • Work out your net worth: This can be done by listing all your assets and any debts or joint debts in your name - use the Sorted net worth calculator.

"Beware of little expenses - a small leak will sink a great ship."

- Benjamin Franklin

Relationship property law

The Property (Relationships) Act covers how homes and other assets are divided when people divorce or separate.

De facto relationships

In most cases, the Act only covers ‘de facto’ couples who have lived together in a relationship for at least three years.

But even if your relationship lasted for less than three years, you may still be covered by the Act if you have a child, or if you’ve made a substantial contribution to the relationship.

Married couples and civil union partnerships

Married couples and civil union partnerships are covered by the Act from the date of the marriage or civil union. If a marriage or civil union has lasted less than three years, different rules apply to the division of property.

There’s more detail about relationship property on the Ministry of Justice website.

There’s also useful information about dividing up relationship property, living together and what happens in a break-up on the NZ Law Society website.

Adjusting to a change in income

If separation means a change in household income, it's important to know exactly where the money comes from and where it goes.

Sorting out the day-to-day finances

To work out the current state of your finances you’ll need to check the following:

Woman working out her finances with a calculator

  • Power and phone bills
  • Credit and store card bills
  • Details of investments and superannuation funds (including KiwiSaver)
  • Rental agreements
  • Property deeds, mortgage papers, home loan details
  • Savings and transaction account statements
  • Tax records
  • Insurance policies – income protection, life, health, home and contents and car insurance
  • Will and estate plans

You’ll also need to review any business documents if you had a business with your ex-partner. 

Making a plan for the future

Use the budgeting tool to work out a plan for income and spending from now on.

No matter how much or how little you have to play with, sticking to a budget will put you in control of your money.

This is also a good time to set some new financial goals – here’s our guide to setting goals.

If there are debts to pay off, use this debt calculator to make a repayment plan.

See also - Simple Tips To Sort Your Budget

Getting advice

Managing finances after a divorce or breakup can be hard, especially if you’re new to it. But advice is available – including free budgeting help.

Guide to getting financial advice

Free help is also available for the wider aspects of dealing with separation.

The Family Court provides up to six hours of free counselling for people who need to sort out separation issues. For more information visit the Ministry of Justice website.

The Citizens Advice Bureau is also a good source of information, help and advice.

Wills, insurance and superannuation

After a relationship break-up you may need to update your will – particularly if you want to change any references to your ex-partner.

Is Your Will Up To Date?

Your insurance policies may also need updating, especially life insurance if you have children.

Guide to insurance

Getting retirement savings sorted after a relationship ends is an important step in planning for the future. If your partner had been taking care of this, you may need to set up your own savings plan.

Note that if either partner contributed to KiwiSaver during the relationship, those savings could be counted as relationship property and will need to be divided along with the other assets.

Child support

If there are children involved you may need to work out child support arrangements. To find out about child support payments and how they work, see the Inland Revenue website.

Where to go for help


LifeLot members: Make sure you keep your account completely up to date with your financial information, Will and any other legal documentation. This is crucially important not only in the event of accident, illness or death but also in a change of relationship status (both beginning or ending). Keep this info safe, secure and accessible 24/7 within your LifeLot account, and be sure to have your assigned delegates in place. 

Related: Financial | Wills | Legal | Families | Grief Support & Loss


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