You might have been led to believe that marriage ends in ‘happily ever after’ (thanks to Disney), but the reality is that approx. 1 in 3 marriages ends in divorce. Emotional consequences aside- the financial impact of divorce can last for decades and carry on into older age, according to new research. It’s important to understand how to manage finances after divorce.
The numbers and 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.
Sadly, 47% of divorces involve children under 18 years of age (gov.au)
“Child care, medical expenses, education and extracurricular activities are typically called into question post-divorce.”heri Atwood- Founder & CEO of SupportPay
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 good divorce solicitor
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?
Be aware of your income and expenditure. Work out your current budget and plan for a financially healthy future.
Your financial support options
Whether it’s personal or business financial support you require- help is always available.
Get the support you need – financially or advisory from us.
Australian Lending Centre offers:
Speak to our team to see which option is best suited to help you.