By Lindsay Taylor, CFP®, J.D.
I recently met a woman while working in our church nursery. Between diaper changes and squeals, we asked the basic, get-to-know-you questions.
And then came the one question I dread: “What does your husband do?”
When I responded that I was divorced, I braced for an apologetic response met with an empathetic head tilt. Instead, she cheerfully said, “Congratulations.”
I immediately laughed. She went on to explain that she can only imagine how tough a decision it was for me to end (or accept the ending of) my marriage and that she was genuinely congratulatory for me surviving the ending.
The truth about endings is that they are incredibly hard no matter how necessary.
Approximately 39% of all marriages today end in divorce (down from the 50% peak in the 1970s). While the divorce rate has declined, so has the number of people getting married. Instead, what has increased is the percentage of women who initiate the divorce.
In preparation for that decision, many women rely on experts to provide advice on next steps: therapists, attorneys, friends. While many think of the financial impact a divorce causes, very few proactively engage a financial planner to walk through what to expect in the divorce process.
As both an attorney and a CERTIFIED FINANCIAL PLANNERTM (and divorcee – a word I hate), I am in a unique position to help women navigate this new reality. So, what do you need to think through financially as you begin to explore this new beginning?
- Get the facts. A recent study titled “Women, Money, Confidence: A Lifelong Relationship Methodology” found that almost 94% of women believe they will one day be in charge of their finances, but only 28% currently feel empowered to act on their finances in their current relationship. Do you know your family’s income and expenses? Do you know what assets and debts you may have? If not, do you even know the login information to access online accounts to gather more information?
- Get organized. Begin gathering all relevant financial materials. You will need tax returns, pay stubs, and account statements (mortgage, credit cards, brokerage, retirement, checking, and savings).
- Determine Whose is What. Did you sign a prenuptial or postnuptial agreement? If so, do you understand it? If not, do you know what could be considered separate versus marital property?
- Create a budget. It is the most dreaded word – budget; however, you need to know what you will have to spend going forward. Review your current expenses and determine what might change (increase or decrease) through this process. For example: Will you need more childcare? Will you need to move? Will you have to cover the cost of health insurance?
- Do the analysis. In the midst of mediation or litigation, emotions are high. How will you know if what is being negotiated will be enough for you moving forward? Take the emotions out and, based on your budget and assets, plan for what you can and cannot accept in a financial settlement. Having realistic expectations of needs and wants will help remove the emotions from the finances and, ultimately, allow you to make a decision based on your and your children’s needs.
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