My dear Friends,

unless women have, or had, for that matter, a very generous husband and favourable divorce laws, they probably end up financially considerably worse off than trhey were during their marriage.

Many divorcees do struggle at the beginning. Whatever the earnings, spousal support, compensation or the amount tucked away in a personal bank account. And let‘s be honest; nobody enjoys sizing down- this stresses us.

Divorce is not only costly in the short run, but it can have a serious long-term financial impact if you’re not careful.

Years ago, I was in that situation and so lost. Consequently, I was anxious and fearful for my financial future despite having a substantial seven-figure sum in my bank account.

Because I have been there, I can tell you “how” to gain financial control after a divorce. So hang in there – relief is coming!

Painful costs

Believe me, I know about the joyous aftermath of divorce! It’s truly a heartwarming tale of financial discomfort and emotional wreckage. For most, divorces have this uncanny ability to turn your financial stability into a crumbling house of cards. And let’s not forget the sheer agony that accompanies the events leading up to the separation and the grand finale itself. In the end, it is a rollercoaster ride between managing your finances while your mind is a vulnerable mess.

In many countries, age-old gender norms have kept women from being financially independent or participating in financial decision-making. So many women around the globe are still far less confident and also less competent when it comes to financial planning.

Even with adequate monetary resources after navigating a divorce, starting afresh can be a herculean task.

On a personal note

My divorce happened when I was in my early fifties and had been married for 25 years. I was a freelancer with some inherited money. My ex was a man with a substantial estate and an income to match. He was quite patriarchal and abusive when it came to family finances. So, sorting out the finances became the hardest part of the ordeal once I had initiated divorce proceedings. 

The financial knots seemed difficult to untangle, and my husband refused to pay spousal support. Over the years, I had become accustomed to the comfort that stemmed from knowing that my husband managed everything finances and was ultimately in charge of securing our very high standard of living.

It was very sobering once I realised that I had to abandon the lifestyle I was accustomed to and that my financial future was my sole responsibility. After the divorce papers were signed, I was literally without health insurance, no house, and no pension. Despite a comfortable nest egg in my bank account, I was terrified to the point of being completely paralyzed simply because I had no clue what to do next.

To add to the confusion, my social background still perceives divorce as a problem rather than a solution. Divorced women are still judged and socially stigmatised. By the way, I live in Europe, just in case you thought otherwise. Needless to say, this added stress while trying to figure out my finances.

To cut a long story short, I walked away without financial support and little chance of securing a fixed-income job at my age. Reality had caught up with me– and I was seriously clueless.

The Bill

There is a broad range of price tags for a divorce: for example, $76 billion in the case of Bill and Melinda Gates, $38 billion in the case of Jeff Bezos and Mckenzie Scott or $733 million in Sheikh Mohammed bin Rashid al Maktoum vs Princess Haya bint Al Hussein. Despite few getting such generous settlements, still a divorce has considerable fixed costs.

Divorces can run somewhere to the tune of $15,000 to $20,000. The $500 divorce is uncommon because there is usually just too much to fight about. Expenses most commonly include:

• Attorney fees
• Court costs
• Early neutral evaluations fees
• Mediation costs
• Refinancing costs for your home (if you own one)
• Record deed fees for your home (if you own one)

Whether costs can be split between parties or if the applicant(the one actually filing for divorce) has to foot the bill depends very much on country law.

Odd divorce laws

Divorce laws differ from country to country and are deeply rooted in local customs and a country‘s religion. Before we go any further, I would like to look at some only because it helps to put the many difficulties some women face in perspective.

How to prepare

Despite divorce being quite common in societies around the globe, it doesn’t make it any easier to navigate. As a divorce survivor, I can attest that most women have to cope with uncertainty and tension. In order to avoid making a difficult situation even more challenging, you need to be prepared.

Survival list

separate financial presence

Even when you were married, you and your spouse might have maintained some separate accounts. But if you only had joint accounts, now is the time to open your own checking, savings and credit accounts. 

Prepare to sacrifice

You might not get to keep everything you want, so focus on what matters most to you, be reasonable about it, and pick your battles wisely. Just know that your lifestyle will probably change, but you won’t necessarily start from zero, even if it feels like that. You’ll start fresh!

Gaining financial control

Still, many women, even those highly educated, have very little understanding of personal or family finances. Once a woman is faced with this fact after the divorce, it’s normal to feel shame and anxiety over their lack of knowledge.

The first is to “give yourself permission to forgive yourself for all the financial decisions and choices you made or failed to make during your marriage.”

While it’s true that no two divorces are exactly alike, there are some general principles to smooth the financial road before you.

be honest with yourself

Do you manage to live within your financial means or below? What do you think about money? Are you good with handling finances? Do you own financial intelligence? The idea is to ensure you’re not spending everything you earn and to invest. If you don´t, your life can be quite stressful. By doing some careful planning, you might be able to cut down on expenses and still enjoy a comfortable financial life.

Choose a wealth advisor/manager

Only five per cent of people seek financial advice when getting a divorce. Friends are really the wrong people to ask, or they lack insight and competence, but second, they are biased as the information they pass on is filtered.

Seek tax advice

Your tax situation will almost assuredly change after your marriage ends because you can’t file as married anymore.  Additionally, you may have to pay tax on the earnings of a settlement you were granted. Or the divided pension fund you now have in your own name is taxed differently. You need to prepare for the implications, so seek advice.

Get insurance

If you were previously getting health insurance through your ex, explore all your options for getting covered on your own. If you were covering your ex, make sure he or she is taken off your policy so you don’t get stuck subsidizing his healthcare costs (unless your divorce decree requires you to do so). 

Be frugal

Whatever your settlement or spousal support, this is not a time to splurge. It might sound tempting and might give you the much-needed instant flush of dopamine, but as a rule, don’t spend until you have established your long-term financial needs.

Prioritize emergency saving

To get back on your feet, you may want to build an easily accessible source of funds for unexpected drops in income and/or spikes in expenses. You may want to keep three to six months’ worth of expenses in emergency savings in a separate account.

Set a new budget

Now that you know how much money you will have, you need to keep track of money. It will likely be hard in the stressful days after your divorce. By taking charge of your budget, you may be able to avoid incurring debt. Make a list of all the expenses for your post-divorce household. See how this expected spending matches your financial resources. Can you really keep the same lifestyle, or will you need to scale back in some categories?

Eliminate debt

If you left your marriage burdened with debt, explore options to lower your interest rates or restructure it in order to get rid of it. If immediate elimination is not possible, start making aggressive payments towards it. Your monthly financial situation will greatly improve when you no longer need to pay off debt constantly.

Invest the money

Using a lump sum or most of your spousal support for luxuries like holidays may be tempting. But to secure your financial future, you need to invest the money. Plan for the future your husband may stop paying spousal support because he had to file for bankruptcy.

Start with your own “retirement” plan

If you have been relying solely on your spouse’s retirement plans, you’ll need to establish one of your own. Discuss this with your wealth advisor/manager. If your divorce agreement divides your shared retirement assets, you will have your share of the assets transferred to your own retirement fund.

Break the cycle

Don`t buy a home like the one had. There may be a temptation to buy a house like the marital home or to keep the marital home, even if it includes borrowing more, but this may not be feasible based on one income, so be realistic about the type of house you can afford.

Review legal documents

You’ll probably have to update the beneficiary designations on your life insurance policies. These designations are very important and can override the instructions in your will. Also, you’ll need to revise your will and other legal documents like a living trust. It’s a good idea to consult with a lawyer to make these changes. 

Look for ways to increase your income

You might have been lucky enough to get a settlement or even generous spousal support, but you are still worse off than before. Look for ways to earn more by learning new skills or picking up a side gig. Apart from the money, it will boost your self-esteem and lift your spirits during your early days of being newly single. This extra cash will help you become financially stable and overcome any money struggles the divorce is causing you. This applies irrespective if you’re close to retiring or a stay-at-home parent.

Improve your financial intelligence

This is not about getting a university degree. But, too many women are either not interested in finances or believe peer group hearsay will suffice. You need to get interested and stay informed to make decisions. Choose financial education tailored for women. Read blogs, listen to podcasts, join a community, book an online masterclass or get a mentor. With more knowledge, your financial confidence will grow.

Conclusion

Healing yourself mentally after a divorce can be time-consuming, and chances are it is not going to be a linear trajectory. In the midst of emotional upheaval, it may be tempting to seek relief by spending money on activities that you like or that give you joy. However, it is important to tread very carefully as it could become a major cause for concern later on. Channelling money in any way – be it for a small indulgence or investments- should be done with extra deliberation right after a divorce.

Rebuilding your financial landscape post-divorce may appear overwhelming, but it’s entirely doable.

Take heart in knowing that countless people have survived it and thrived afterwards. I am the best example. Think back to the challenges you’ve faced in the past and remember the clever financial moves you’ve made to overcome them.

By following the rules, you’ll be on the path to a fresh financial start after divorce. Remember, you’ve got this!

SOURCE: HINDUTIMES; SCHROEDER´S PERSONAL WEALTH; THIS IS MONEY; CREATIVE PLANNING; LEGALZOOM; ARAG LEGAL INSURANCE; FORBES; INVESTOPEDIA; BONOBOLOGY