Money Answers: How do I handle my money after divorce?

BusinessDesk investments editor Frances Cook responds to emails from readers each week, answering questions about money. Below, you will find her expert advice. Send your questions to [email protected].

Hey there, Frances, 

I've parted ways with hubby, and for the first time as of Friday, I have money. 

I've always been known in my family as "the spender", and yes, I like to enjoy life, but now that I have this wad of money from the sale of our marital home, I'm suddenly terrified that I'm just not responsible enough to look after it. 

So, I've decided to put most ($500K) into a one-year term deposit while I rent. (I'm freelance and a solo mum, so getting a bank loan was hard and terrifying.) 

I've held back $120K in my savings. .. but I guess my question is, am I doing the right thing so far, or should I be diversifying more?

Huge thanks for any advice,

D.

Hi D,

What an exciting new chapter in your life – I’m sure what led you here was hard, but now you’ve got the opportunity for a fresh start on your own terms. 

Of course, the flip side is that having your financial future solely in your own hands is mildly terrifying, especially when you have a child relying on you. 

The good news is that I actually think you’re pretty well-placed. Let’s run through it. 

Money personality

You mention that you’ve always been known as “the spender”, and I just want to say a) that doesn’t have to be a bad thing, and b) just because you’ve had certain behaviours in the past doesn’t mean that you have to continue them now. 

This is your glorious restart, after all. 

I often say that being a spender has turned into a financial strength for me. 

Now, at least. It wasn’t always that way. 

At one point, money burned a hole in my pocket. If I see money sitting in my everyday account, I still want to spend it. 

But I deal with that by getting it out of sight – autopayments for the day after payday that whisk it off into savings or investments. 

I’ve been realistic about my behaviour and adapted accordingly, rather than trying to force my money behaviour to fit someone else’s standards. 

Seeing as you’re freelance, you can always whisk those amounts off yourself after a payment comes through. 

Being a spender also makes it easier to do things like investing. Buying shares feels like spending, but you’re actually investing into your financial future. Lovely. 

If you’re realistic about yourself and some of the things that have tripped you up in the past, you’re actually well ahead of many other people. 

Now, you can figure out systems that work for you rather than some idealised version of yourself that you will never stick with. 

Your money history means I also suspect you’ll be more cautious than some overconfident people who throw everything into crypto and won’t listen to others who try to warn them away. Good. 

Savings

Putting your money somewhere safe and taking a breather is a great idea. 

You’ve just been through a huge life change, and the last thing you want now is to make snap decisions. 

Emotions and money are like oil and water. They mustn’t mix. 

Don’t listen to other people and their thoughts on what you "should" do or what’s "smart'’ if there’s an "opportunity". 

You’re figuring out what you want life to look like now. Then you can use your money to help you get there. 

Giving yourself a year to get used to the new situation and decide what you want will help you make calmer decisions. 

Bank accounts and term deposits are great holding pens while you take that breather. 

But my instinct is that the money shouldn’t stay there forever. It could be doing more for you, especially with such a big chunk of change. 

The issue is there’s more than one option, depending on what type of lifestyle you’re after. 

Time to gather information

The main options that strike me for someone in your situation are that either home ownership or investing in shares could work better. 

But if you’re already worried about doing the wrong thing, arming yourself with knowledge is a wonderful tactic.

Understanding what’s happening around you and how these financial systems work is much less scary. You’ll trust yourself to step into it; even if something goes wrong, you’ll know where to turn next for help. 

Trust me, much of this looks complicated on the surface but is incredibly simple underneath. 

So spend this breathing space time getting more information – listen to financial podcasts, read a couple of books, and write to this column. 

You’re already doing some of that, so you’re already well on your way! 

It’s trite, but it’s true – knowledge is power. 

Talk to the pros

And $500,000 is a big chunk of change, so it’s worth involving a professional. It’s a little scary picking the right one, especially if you’re already nervous about money, so here’s how I would handle it. 

You mention that getting a home loan approved is tricky when you’re freelance. Yes, true, but you do have a sizeable deposit on your side. I don’t think it’s impossible if that’s something you want. 

Talk to three mortgage brokers to see what they make of your financial situation and how you could get in shape to buy a house within a year (if that’s what you want). 

They’re free to you, so you might as well get a good understanding of different points of view and see if there’s someone out there who you feel understands you and can help.

Some of the mortgage game is just understanding what banks want to see so that they consider you a "good risk". A bit of preparation so you have the track record they want to see can be surprisingly achievable. 

Whether or not you want to go down that home ownership route, I would also make an appointment with a financial adviser. 

They are different from a mortgage broker and have different specialties, but in your situation, I’d be looking for someone who specialises in investments, including KiwiSaver. 

They can help you discuss life goals, what you’re comfortable doing with your money, and set up a plan that works for your situation. 

Most financial advisers will give you the first meeting free, so I suggest finding three of them to get a range of opinions and see if there’s someone you feel really comfortable with. 

You can find registered professionals at financialadvice.nz. 

I recommend asking a key question: “Have you worked with someone in a similar situation to me, and how did you help them?” Talking about concrete examples can help things make sense. 

If you feel they talk down to you at any point or don’t understand your life goals, that’s the sign of a bad fit; on to the next. 

You’ve already laid great groundwork, so all you have to do now is capitalise on it.  

Send questions to [email protected] if you want to be featured in the column. Emails should be about 200 words, and we won't publish your name. Unfortunately, Frances is not able to respond to every email received or offer individual financial advice. 

Information in this column is general in nature and should not be taken as individual financial advice. Frances Cook and BusinessDesk are not responsible for any loss a reader may suffer.