Can I Afford to Get Divorced?

Your family’s financial resources play an undeniable role in how challenging divorce will be for you and for your children. A trusted financial advisor can make a real difference in how you manage the transition to divorce now, and how this impacts long-term transitions like retirement and college savings. That’s why I always include a chartered financial analyst as part of all of my collaborative divorce cases – having a specialist to guide you through financial choices now can lead to more certainty and security later.

And yet – sometimes it can feel like a bridge too far to consult with a financial planner at the start. Maybe you are just investigating the possibility of divorce, or maybe you are in early stages. What I’ll share here can’t substitute for professional financial advice, but they are some tips to get you started in thinking about the financial contours of a divorce before you get a professional onboard.

The most important thing you can do right now is to get a sense of your current financial situation. It’s okay if you don’t already know what that is. Many households have a division of labor where one person does more with the finances, and perhaps you weren’t that person. There’s no need to blame yourself – it’s just time to get a good sense of your situation now.

First – where is your money currently going? Get your hands on credit card statements and bank statements for the last 6 months to get a sense of what you have to cover (like loan payments and housing costs), want to keep paying (like select streaming services and subscriptions), and what might feel easy to drop if needed (perhaps some entertainment or dining out costs). You may need to go out a full year to get a real sense of costs that occur only once or twice a year (like some car insurance) but 6 months can give you a real sense of what the bills are that you already have.

Second - what money do you have coming in? Go to your payroll stubs, submitted tax forms, any rental or business payments, and any investments paying dividends. Even if this news does not make you feel like you’ll be ready to face the financial obligations you just identified in the first step, it is better to know than not to know. Getting as familiar as possible is the goal at this stage.

Third – what other assets do you have? Did your employer contribute to a retirement account, now or in the past? Did you? Do you have any collections, accounts, or other personal property that you might be able to leverage if you need to?

Just gathering this information in one place is an important step. If you can do it with your co-parent and lay all of your cards on the table together, it may help in designing creative options for how you divide assets to get you each on an independent trajectory moving forward, but for many people that is difficult or inappropriate to do together. Having a sense of your own financial reality from your own perspective is already a good start.

If you decide to move forward with divorce, know that for all couples there are financial changes that are difficult at first. No matter how you move through divorce (litigated, mediated, collaborative, self-filing), there are costs for the professionals involved as well as changes to tax status and insurance. For many families, establishing two households when there was previously a single household can create a large financial challenge, particularly short-term.

However, if  some resources can be allocated to developing spaces in both parents' homes that your child/children can help design for their comfort it can give them an important sense of autonomy and place. If you can provide belongings that are duplicated in each space rather than having to be transported each time the child moves from one home to another that can further reduce divorce-related stress on children (particularly for young children). Even a small amount budgeted to building some consistency and ease for children is a consideration you’ll want to keep in mind.

The financial aspects of divorce can be daunting. But getting on top of your own financial understanding and doing some solid planning is something to approach, not avoid. Whatever your financial reality is, you can take steps now to make informed choices about it.