Half of separating couples take on new debt

New research has found 45% of Australians take on new debt after separating, with finances playing a significant role in couples postponing their decision to separate or divorce.

A survey of more than 1,200 separated Australians, commissioned by Real Insurance, found almost half made "quiet" financial moves before splitting, with women (22%) more likely than men (13%) to build personal savings without telling their partner.

Around 40% said financial pressures had delayed their separation with 42% of separating couple reporting they were forced to remain living together because they couldn't afford to live separately.

This "forced cohabitation" arrangement was far more pronounced among younger Australians.

See also: A financial guide to divorce and separation

How much does separation/divorce cost?

The survey measured the average cost of separation at more than $18,000 including legal fees, asset division, mediation, other professional advice, and costs associated with divorce filing and services.

This did not include any costs for the purchase or sale of shared assets or any ongoing support payments.

More than a third of respondents said they found the financial costs of separation higher than they'd expected.

The most frequently cited unexpected expenses were increased living costs (32%) and the cost of establishing separate households (30%).

Principal lawyer at Hitch Advisory Elise Fordham said the cost of a 'good' or 'bad' divorce can vary greatly and can be helped by starting legal conversations early.

"Separation is one of the most financially complex events a person will face, and the decisions made in those early weeks can have consequences that last decades," she said.

"Legal advice isn't a luxury; it's a safeguard."

Don't prolong the inevitable

The survey identified a typically Australian 'she'll be right' attitude masking a silent epidemic of "quiet uncoupling", with 70% of Australians going through separation or divorce revealing they'd postponed the decision.

It found many couples were already living separate lives under the same roof, with more than half (51%) sleeping in different bedrooms and 53% managing their finances separately long before an official split.

This is more common among younger generations, particularly Gen Ys (30-45 years old) with 71% reporting such arrangements compared to just 41% of Baby Boomers.

"We see it constantly," Ms Fordham said. "People stay in limbo hoping things will resolve themselves, often because they're afraid of what the legal process will cost or reveal.

"But delay rarely protects you financially. More often it compounds the problem."

Women hardest hit

The survey found women are disproportionately likely to have sacrificed financial independence during the relationship, often to raise children or support a partner's professional life.

"For women who have stepped back from their careers, separation can be a financial freefall," Ms Fordham said.

"Overnight, they can lose access to income, joint accounts, and the family home - often with no independent footing to fall back on."

Younger generations, particularly Gen Y, are notably more likely to delay separating, citing financial pressures (33%) and housing affordability (33%), highlighting the impact of broader economic challenges on this demographic. 

The survey also found younger people were more likely to seek counselling to repair their relationships (60%) compared to Baby Boomers (30%).

That said, overall, three in five survey respondents said they did not access couples counselling or relationship support services before separating.

Separation not just about finances

But a 'good' or 'bad' separation was rarely measured by finances.

Almost half of respondents (47%) said the emotional toll was the main measure of their experience of separation.

Around two in three (66%) said they were happier post-separation with half describing themselves as "much happier".

This sentiment was more commonly reported by women (56% vs 44% of men).

But financially, the road can be a lot longer, with 17% reporting they did still not feel financially stable after separating and 15% admitting they didn't feel emotionally stable.

Perhaps unsurprisingly, almost half of respondents said they would approach separation differently if given the chance.

Just over a third (35%) said they wish they'd had a better understanding of the emotional impact, the impact on children (31%), and the true cost of separation (26%) before going through the process.