Uncensored Money Season Four: Consciously Uncoupling

Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 28/02/2023


Show Notes

This month, Mel and Lawsie are talking about all things money and relationships. In this episode, they share tips on how to consciously uncouple without compromising your financial security or your future.

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Mel: It's a fact of life that many couples will split and the current stats are about one in two. So Lawsie, out of you and me, I'm the one. What we also know that we talked about in our Love Married at First Sight and Money episode is that money's the number one thing couples fight about,  money disagreements affect 70% of couples. And interestingly, disagreements over money are a stronger predictor of divorce than other commonly cited causes of marital disagreements. And by commonly cited causes, I wanna suggest either incompatibility or cheating. So money trumps that. So that means that chances are money was already a source of tension in the relationship, and now at the end, when there's already so much more tension, it's gonna be there again, heightened by the fact that you're gonna have to talk about it.

And what I also know from having helped so many clients over the years is that in protracted and messy settlement disputes, the only ones who win are the lawyers. That's why today, Lawsie and I want to talk through how you might be able to unconsciously couple well, but it's also that reminder that if one in two couples fail to take a moment to think about what if you were to split?

I can't believe I'm saying that, that's terrible, but chances are, so this is something that happened with Lawsie and I back when a friend of ours split. More than a year ago, Lawsie, where you and I would argue that we are both in quite a good financial position and it actually made us both pause and look at it and say we are, unless we split.

Lawsie: Yeah.

Mel: I think it was you that had said that, and I remember being really shocked by that and going, okay, I'm gonna do something about this. But it is taking that moment to say you never want to, it's never something on the cards for you. But it is that reminder that the great position that you might be in as a couple might not be what you are in as individuals. So by strengthening that and knowing that you're okay even as individuals that will bring the sleep at night factor in. Cause any decision you make is not based on money. I'm not staying just because I can't afford to split, which I think that's pretty powerful. And sometimes that can make you want to work on your relationship and your finances, which is only a good thing. But if you are thinking about splitting or you have started to consciously uncouple, here are some of Lawsie and my tips from having worked with clients for many years.

So, Lawsie, I thought we'd start with what are the biggest mistakes you and I have seen people make. And we've seen some big ones, I reckon.

Lawsie: Yeah, I think, in general terms, I would say where we see potentially the biggest issues is when people have gone, yep, we're splitting, everything's amicable. It's all gonna be 50/50. And generally there is one person who is more across their finances than the other. And then suddenly, something starts to go awry, and as all of the proceedings and everything unfolds, suddenly it's not as good as it was and it's not gonna be this 50/50 split and there are more or less assets and than either both parties thought or one party thought. So I think that's the biggest thing is just the lack of financial awareness from one or both parties can then have huge implications.

Mel: I absolutely agree. That's massive. Or even I remember, and I'm thinking of so many couples actually, the split starts quite okay and the discussion's going well, and then one of them will meet someone else just as the discussions are starting to go and the other one in a kind of “well screw you” move, really digs their heels financially.

And that's the win that they need to have because the other one has won when it came to moving on. And I can give so many examples of that, but that's the emotional side coming out. But also couples needing to win. I'm thinking of one couple in particular where she was convinced that he was hiding assets. So she hired lawyers and auditors and he wasn't being transparent enough. He was being transparent to a point, but because he was almost pretending, he seemed like he was being shady. She was then convinced that he was being shady and in the end, I can't remember what his lawyer's bill was. It was almost $200,000. So any assets that they were really were eaten up by both of their lawyers, which I just remember sitting there at the time wanting to shape them, going, are you too stupid? Like I wanted to say to him, stop being a child. And I wanted to say to her, he's being a child. And stop being sucked into it.

But in that situation, no one won except for the lawyers, but also there was the client we had where she was a gambling addict, and he realised and was so taken aback because it's really common for the wife to abdicate responsibility, but in this case, he had abdicated responsibility in that he just worked really hard in the business. She did as well, but her job was paying the bills and so she would fake invoices to hide her gambling accounts so that not only when they split did they have nothing, he had massive debts from supplies that hadn't been paid, tax bills that hadn't been paid. So it's that devastation.

And for me, it's that reminder. And we said it earlier, it's that reminder to take a moment to think about what if you were to split and you don't know what's going on financially, now is the time to understand what's going on financially, so that if it was to happen you know what's going on. You've got foresight and you can start to deal with things when things are good instead of when things are bust. Bit Lawsie, I think we've forgotten a big mistake we know of.

Lawsie: Oh, I'm gonna be looking at you when we are looking at one in two relationships

Mel: Oh my God. And I know I've told this story so many times that I will tell it again now, with my first husband when we split it was harmonious for the most part. He didn't have his own lawyer. So I hired a family lawyer and he just went along with it cause it was just quite easy.

We didn't have kids, so there was none of that custody bits and bobs, but he made a throwaway comment to me during it that I wouldn't make it on my own. And I, as a bit of an ‘f-you’ to him took every single cent in my business accounts and the entire divorce proceeds and gave the whole lot to Opportunity International. And I've had so many women tell me what a boss move that was. And I am here to tell you that it was stupid. It was the furthest thing from a boss move that there currently was. And it was such a stupid mistake. And we are gonna talk about what I would've done differently today and also how you can prevent that sort of mistake from happening and how I see so many other women not do what I did, but do a version of that through how they operate with their uncoupling.

But I always tell that story cause I was an accountant at the time. I'm supposedly smart with money and know what to do and have seen that both of those examples that we talked about, they had already played out before I divorced, and yet, I made a stupid decision. So it's really easy to stand and go, how interesting. But let me tell you, when there's emotion involved…

Lawsie: Anything can happen.

Mel: It’s very different. And if there is a common thread with these stories, it is if one partner simply doesn't know what's going on with their finances. I would say those are the two biggest mistakes that we used to say

Lawsie: Definitely

Mel: and I appreciate that it's easier to say, don't let emotion get the better of you than to actually live that out. Trust me, that's just like saying ‘calm down’. No one in the history of being told to calm down has ever calmed down when someone has told them.

But still today, as I said, I speak to so many women who either think it's great what I did or attempted to walk away from what is fair or what they illegally owed because it's too hard. Cause they're just, I feel like we get worn down and because we don't like talking about money anyway. The number of women that either we've seen Lawsie inside the My Financial Adulting Plan, or we had as clients back in the day that was like, you know what? This is just too hard. He can just have it and I'll just be content with this.

Lawsie: Yeah, and I think it's also they're talking to other people that they know that have done the same thing as well, so they're like, oh, they've done it and they've bounced back. Rather than taking that step back and going, actually no. As tired and as over it as I can, I need to take a stand and I need to do this because the implications for you now and in the future are huge.

But I think it is such a common thing that people do, so others just go oh, okay, you did it, you survived. All right, I'm just gonna do that cause it seems easier at the time. And then I'll put an end to that and then move forward with the next thing.

Mel: Yeah. And I think as women it is considered unfeminine to want money. Like it's considered greedy and all the toxic traits that we have been taught that it's actually not nice to have money, and yet it's not greedy, it's simply a division of assets. It's simply as un unemotional as that.

But I appreciate that. It's very easy to say and it's another thing to do. So what we wanna do today is we wanna rationally and without emotion as much as possible, talk through what you might wanna think about when it comes to consciously uncoupling and even stories of what we've seen when we've seen it done well, so that you've got a little bit of a starting point, from where to go. I wanna make it really clear, Lawsie and I are not lawyers.

Lawsie: No, definitely not

Mel: Despite me having studied it for three years, we are not lawyers. So that will bring me to our very first point that if this is something you are thinking of or that you've started, you need to speak to a family lawyer. I think that was the one thing that we used to see, if someone was coming to us back in the day and things were rocky or they discovered something or they'd been blindsided, our first thing was always speak to a family lawyer.

That sounds worse than it is a lot of the time, cause a lot of the time you're just seeking information. You don't have to go through with anything. But it's that whole knowledge is. And if you take one thing away from this, it's to speak to a family lawyer really early.

Lawsie: Definitely, and they're not scary. Like I think some people have this perception that a lawyer is, they're like a powerhouse and they're standing up against people in court. But ultimately, the family lawyer is there to help you navigate your way through this, if that's what you decide to do, and to be your best advocate really. And everything doesn't have to get heated and all of those things. I think people go the worst-case scenario, but just having someone that can actually explain the process to you, the implications of things is super, super important.

Mel: and a great family lawyer will advocate and will mediate and won't just say this has just gotta go to court and this is it. And this is a hill we die on. And we work with some great family lawyers including interestingly, mostly female family lawyers and they are exceptional. If you wanna hear more of that, I did a What The Finance, episode on divorcing and relationships. And in that episode, I spoke to Melanie Tonazzi from the Sydney Law Group, who is one of the family lawyers we've spoken to in our courses.  So if you want to hear from a family lawyer after this episode. But it’s really important to talk to early. It doesn't mean what you necessarily think it means, but it's really important to figure out how you protect yourself. Now, if you've got joint accounts, they might say, look, we need to do something about that. If you've got the primary credit card and he's got the joint card, they might suggest that you do something about that. It's doing something to protect yourself early versus waiting because you don’t find out that you are the one in financial trouble without realising it.

Lawsie: Definitely.

Mel: So number two, Lawsie…

Lawsie: Is to get your accountant and financial advisor involved earlier as well. So again, we're saying get that team of professionals around you. The lawyer, get an accountant and get a financial advisor if need be. And the reason that we've got that is cause some people will go, oh, but my partner got an accountant or my partner's got a business and always use their accountant, which is lovely, but at the end of the day, it's your partner that's paying the bills for that. And so the accountant, whether consciously or not, is more likely to be siding with them. And so it is really important that you get that independent advice and just also as a sanity check even if you still think everything's all okay with your partner and with their accountant. And you might feel like that's okay, but particularly if you are not as financially aware or across all the finances in the business or for your household, you need someone that's on your side, that's gonna be giving you that different point of view or someone that can support you through this if you decide to go through with it. And then someone that you have a relationship, so you can go and ask questions, and you don't have to worry about them going, oh, they're gonna say that thing to my partner, or whatever it is. It's someone that you trust, someone that you can build that relationship with that's gonna be able to help you now, but also the longer term as well. And once you're through this, then well, of course you're gonna need to be getting your tax returns done and you wanna start to build your wealth, which is where a financial advisor is gonna come into play.

So if they can help you through this, which is most likely one of the toughest things that you'll go through, then everything else should be (inverted commas) “smooth sailing” after that. So it's worth it to be able to have those relationships and that support network around you.

Mel: definitely. And you might really trust and have a great relationship with your partner's accountants. Like you might be there together as a team. But what I remember in my business, sometimes we would either send them to another accounting firm for a second opinion because we wanted them to trust us. So a good accountant will suggest that anyway. Or sometimes we gave them to someone else inside the business so that they had their own person to talk to and they didn't feel like they were just using their partner’s accountant. So if you really trust and like the firm that you're using, that can be an option as well. But I totally agree. You wanna start to build up your own team.

The next one I wished I had, and if I had 100% I wouldn't have made the decision that I made, and that is to have an emotional and financial support person that you trust that you can run big financial decisions passed. So what I mean by that is it might be a friend but again, if your friend, to your point Lawsie, is the sort of person that's oh yeah, just, screw them. Just don't worry about it. Just, let 'em have it. Start again. You'll be right. We don't want that person to be your emotional support person. But if you've got someone that's really smart financially that you really trust, then that might be your person. Or it might be a financial advisor. It might be an accountant, it might be someone that you pay, that you feel comfortable with, but choose what a big financial decision means.

It's not gonna be, I wanna go get a hundred dollars haircut. They probably don't need you to run that by them. Having said that, an emotional decision might be to cut your waist-length to a pixie cut. That might be an emotional decision. You run past them! But also these are the financial decisions we want you to run past them. So choosing that person, I think is really wise. And then making sure that you actually run your decisions past them. So maybe it's a fortnightly phone call or a weekly phone call or a monthly check-in just to make sure that you're doing.

Lawsie: Yeah. And I think that's a super important thing for anyone, not just in the consciously uncoupling state. But also I think if suddenly, God forbid, your partner passes away or something like that where you have this massive life-changing event, I think having that emotional support person around you, that you can run those things by is super important because I think any of those big life events can be a trigger for you to suddenly go, screw it.

Mel: And moving to Tuscany

Lawsie: exactly, and it can absolutely be one of these and that may very well be the perfect decision for you. But also I think it is really important just to make sure you've got someone to sanity check that and you're not just doing this knee-jerk reaction to this event or these circumstances that have happened. So yeah, definitely important for this, but also for bigger life-changing events.

Mel: No, that's true. And it is true cause a lot of this is relevant to any large or as you said, life-changing event, and maybe even it's a time period and a support person that you don't make any major financial decisions for 12 months or whatever it is because you just wanna make sure that you're making them rationally and not that gut reaction where it's fleeing or escaping or what have you.

The next one is to be smart about the family home and not just make decisions cause they're easy, but make them because they're right for you long term. And really understand the consequences of these decisions. We had someone recently that said, you know what? He's really pushing me just to take the family home, but he wants my super.

What do you reckon? First of all, that's a decision. That's really something your family lawyer should be instructing you on, but also that's potentially something that you might run past a financial advisor or another trusted person to say, can you run the numbers on this for me because just say you went, no, actually, I don't feel comfortable with that. It may be smarter for you to have a small mortgage. And to keep your super because that super's gonna compound over time. And what we know as women generally end up with 23% less super than men, women over 55 are most at risk of homelessness and so many more stats. So it might be smart for you to have some sort of debt and keep the super, whereas in that moment all you might be thinking is, I've just gotta keep the home. I've gotta keep the home and I'm scared of debt cause I've never had it in my own name. So going and running that decision past someone and not just going for the easy, I think is really sensible.

Lawsie: Yeah, definitely. And then I think that again comes back to that point too around making sure that you've got an accountant and or a financial advisor that can give you the full picture on that as well.

Mel: Who can run the scenarios for you. Yeah.

Lawsie: but they might not be a tax expert. So again, it just comes around to making sure that you've got the right team of people around you so that if you are not sure on the decisions that you're making or the options that are being put before you, that you can draw on their advice and expertise to help you ultimately make the decision that's gonna be right for you now and in the future.

Mel: because a few hundred dollars spent scenario planning, and that's all they're doing. They're not advising you what to do, they're just showing you the cost of if you do something. So really important so you can understand the long-term consequences because let's take super, for example, most people when it comes to super and childcare, all they think about is the super being the lost super that you've paid that it might have forgotten over the seven years say. So maybe it's 35 grand that your career break will cost you in lost super. But what most people don't realise is that 35 grand is really something more like $300k to $400,000, cause we are forgetting about the compounding return of $35k over 30 years. With financial literacy so low and us not talking about money, we don't even think to think about that so running scenarios past a professional, a finance expert, can really help you make smart decisions.

Lawsie: Definitely.

Mel: Really important, Lawsie. They're all important, but this one particularly as well.

Lawsie: Again, and I think it's just highlighting that yes, couples can split, but if you're in a situation where there's financial abuse, then obviously making sure that you might wanna have the team around you, but ultimately you need to be seeking counselling and support to see you through that.

It's not going to be this, necessarily this rosy picture of the 50-50 split because there are obviously other issues that are at play there. And that absolutely has to be addressed. But I would say, if you are in that situation, that absolutely has to be your number one thing; to get advice and support.

Mel: And it's that extra level. Yeah, and it's really important to understand if you are someone that is being financially controlled, that has that financial abuse. You might think there is no way out cause I don't have access to funds. That is what women's shelters are for. Once you are there, there are also resources that can be put in touch with, from financial counsellors to free legal and more to make sure that you are looked after so that you have the resources and the wherewithal so that financial abuse can be cut off. But also you can then start to seek recompense for what you actually are entitled to. But sometimes the very first thing is simply leaving and knowing that there is somewhere to go. So if that’s you, go to Google, google your local women's shelter, and make sure you reach out. Certainly New South Wales, that's the Women’s Community Shelters. We've got a local shelter, The Haven, that I support, that's part of a bigger network, but every state and most towns will have this. So it's understanding that they exist, they're there for you in exactly this situation, and then how to access them.

And then finally, we want to start to educate yourself financially. So for me, this is whether I'm in the relationship now and I'm thinking about consciously uncoupling or if I'm on that road of consciously uncoupling, especially if you haven't handled the finances before, or especially if you haven't made big financial decisions, cause it's great to have that independent financial advisor. It's great to have that team of experts. But if you don't have any agency because you feel like your financial literacy is so low and you don't even know the questions to ask, then it can feel really disempowering. So starting to get that financial education now. And it's interesting, Lawsie, I remember probably a year into Covid, we had so many people join the My Financial Adulting Plan who were in exactly this spot, and they said, we don't necessarily wanna leave, but we actually have figured out we need to sort ourselves out. Or they were thinking about leaving and they wanted to sort themselves out.

Lawsie: Ooh. Yeah, definitely. It was actually amazing that they were owning that space and then that they'd come to that realisation whatever they ended up deciding. They're like, no, it's actually super important that I understand this more. So that I can make the best decisions. Cause I think you can contrast that to others that we've had through the course where older and they've followed that traditional thing of, they've got married, husband's been working, she's stayed at home, looked after the kids. And then suddenly in their fifties or sixties, they split and the wives are going, I've got no idea. And again they're so grateful that they've got this resource and education that they can tap into and a safe place to learn. But their advice to everyone else and around them is like, don't be me. Make sure that you are getting on top of your finances. So I think that's just really important. It can be so easy to, go oh, I'm not good with numbers and I can't do maths, and all that kind of stuff, but it's so important regardless of what relationship stage or status you're at.

Mel: A hundred per cent agree. And we'll help you answer that. We won't just help you financially educate yourself. We'll help you answer questions like, what do you want? How can you be smart with money? What are your long-term goals? All the things that you potentially haven't thought about before.

So this podcast to get you started asking those questions. And just to touch on it, if you're going into a relationship, we want you to be smart going in too. So if you have assets or a blended family, again, it's really wise to talk to a family lawyer. It doesn't need to be just for when it's acrimonious or starting to go pear-shaped. In fact, it's actually better when it's not. It might just be a quick conversation to say, Hey, what do I need to look out for? How do I best protect myself? I remember Mel Tonazzi said create a balance sheet when you first go into a relationship, just pop it somewhere. This is what I have going into this relationship, and it's not something that people would think to do, but again, it's something you can do without hurting your partner to help protect yourself. So having that conversation, spending that little bit of money now actually means that you can protect yourself.

But with one in two marriages ending in divorce, what I want the takeaway to be is it's about being wise and smart so that you're both being protected as you go into the next.

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