We might have been led to believe that marriage ends in ‘happily ever after’ (thanks Disney), but the reality is that approx. 1 in 3 marriages end in divorce. Emotional consequences aside- the financial impact of divorce can last for decades and carry on into older age, according to new research. Therefore, it’s important to understand how to manage finances after divorce.

The numbers & women:

According to a Cii research report:

  • 34% of women in their 30s say their money wouldn’t last a month if they lost their main source of income.
  • The average man accumulates 5x the pension pot of the average woman.
  • The average divorced woman has 1/3 the pension pot of the average divorced man (£9,000 vs £30,000).
  • Most women in the bottom 40% of households by household income have no pension wealth at all.
  • Women’s household income fell by 41% following a divorce or separation after age 50, while men’s household income dropped by only 23% (GAO.GOV downloadable report).

Why such a strain on women?

46% of divorced women said they experienced financial surprises, including:

  • Being unaware of the total size of their marital debt (the primary mortgage, home equity line of credit, auto financing, credit card debt and loans).
  • Not anticipating the financial need to return to work.
  • Assuming they could keep the marital home.
  • Expecting child support would be higher or last for longer.
  • The giant cost of health care insurance.
  • Underestimating the cost of getting a divorce.
Child support costs

Sadly, 47% of divorces involve children under 18 years of age (gov.au)

Sheri Atwood- Founder & CEO of SupportPay explains how:

“Child care, medical expenses, education and extracurricular activities are typically called into question post-divorce.”

Since almost 82% of parents with custody are women, these expenses that fall outside that base monthly payment usually land on the mothers.

Ways to manage finances after divorce:

  • Enlist a divorce attorney– They can advise you and help in devising a plan in moving forwards.
  • Close all joint accounts– Open new accounts in your name and take your name off joint bills. Ensure that your credit record is clean.
  • Be aware of any joint debt– After divorce, you not only split assets 50/50, but also split any joint debt. If you suddenly find yourself juggling millions of different debts, then it might be worthwhile looking into Debt Consolidation.
  • Clean up your retirement accounts– Speak to a professional about dividing your superannuation accounts.
  • Don’t get emotionally attached to your marital home– Can you realistically afford to keep it on your own or would it be better to sell up and find something more economically suitable?
  • Budget smart– Be aware of your income & expenditure. Work out your current budget and plan for a financially healthy future.

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