Untying the Knot: The Financial Implications of Divorce
It is known that divorce is emotionally distressing. But its financial implications must also be taken into consideration. Researchers find that divorcing individuals would need more than 30% increase in income to maintain the same standard of living they had before divorce. Men and women are equally affected by the financial ramifications of divorce which is usually greatest during the first year of divorce. Children of divorced parents suffer these consequences as well. Let us explore the financial challenges divorce pose on individuals.
Implications on Women
On a larger scale, women usually suffer more financial losses because of unequal and often lower wages for them. Since most children stay with their mothers post divorce, women have more expenses related to physical custody. After divorce, most women fall into poverty, some lose their homes, and a number do not receive full payment for child support. But the difficulty still differs for each woman depending on how much she contributed to the family income prior to divorce and the former husband’s willingness to provide financial support. Women at the crossroads of divorce should evaluate their financial situation carefully.
Effects on Men
It is a misconception that men do not suffer from financial strife after divorce. Men experience financial loss especially when his former wife’s contribution is substantial to the family income; he will struggle to make up for this loss. There is also the likelihood of him being required to give child-support and other payments. Not to mention his need to pay for a separate place to stay. Sharing child custody also adds expenses. Men who provided anything less than 80% of the family income prior to divorce are more likely to suffer financially post divorce as opposed to those who contribute more than 80% to the combined family income
How These Things Affect Children
Children of divorced parents are more at risk to getting involved in deviant behavior and crime. Most struggle in school and sometimes are unable to go to college. Because our economy depends on well-educated individuals to form our workforce, these children when they become adults, get jobs that do not necessarily increase their personal income
Now that we have explored some of the financial implications of divorce, let us delve into the things to consider before untying the knot
The process of divorce is messy, both personally and financially. So do not be hasty in reaching a settlement because you might make pricey financial mistakes. List down all your combined assets in full detail and determine its worth now and then. Below are items you must list and take into consideration:
- Employment details of yourself and your spouse.
- Financial assets inclusive of properties and automobiles.
- Valuable personal property like jewelry and computer, the items’ worth and any amount you may owe on the item.
- You and your spouse’s financial accounts including checking, savings, retirement, stocks, etc.
- You and your spouse’s personal business interests and their value.
- Current debts and financial obligations both of you may have
Listing all of these down will give you a better idea of how your finances will look like after divorce. This will also help you in planning ahead so you are more prepared for the changes you are about face.
With all these information you have gathered, determine which can be divided in the divorce and what are the pros and cons of receiving certain assets. Your prenuptial agreement is a good place to start. You may also benefit from closing any joint bank and credit card accounts, and start opening new personal accounts to deposit your income to. If you have no income, it is best to go back to the workforce and rebuild a career prior to divorce so you will have enough when the divorce culminates.
Divorce is necessary in certain situations. It is an exhausting process physically, mentally, emotionally and financially. While the first three are inevitable, the latter can be avoided with enough preparation.
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