When women divorce, or contemplate divorce, they report being worried about their finances and how they will meet their financial obligations as a newly single woman. With gender pay disparity and potentially not knowing their household finances, those concerns are understandable. Compounding the worry even further are women who are either unemployed or have been the stay-at-home parent. But, even women who are employed are concerned, contemplating what their financial future may look like.
Here’s the good news – divorced women actually report feeling more financially secure and confident. The reason? Even if she has less money than she did when she was part of a married couple, the divorced woman is now in control of her finances. And being in financial command of finances brings peace, freedom, confidence and a new lease on life.
Many women may not have managed household bills or have been responsible for family financial matters simply because their spouse handled the marital finances. In some instances, women were strictly controlled by their spouse – even being given an allowance! The good news is that the control ends upon divorce. Women repeatedly tell me how liberated they feel just opening their own checking or savings account. The positive impact continues as women open their own IRA, 401(k) account or start investing in the stock market through a brokerage account.
Now I’m not saying that this is easy. Lifestyle changes may be a necessity as opposed to an option. There may be an investment in education or training while there is spousal maintenance being paid. However, having financial freedom can bring a long-forgotten sense of calm and peacefulness as well as an opportunity to invest in a financially sound future.
Here are a few things I tell my women clients to do to allow them more financial freedom:
First, talk with a tax professional about the tax consequences of dividing marital assets and what future tax liabilities will be in regards to earnings, support or maintenance. These are all items that can potentially be negotiated in a settlement agreement.
Second, talk to a financial advisor or planner to get planning advice and to discuss investment options. Figure out where you want to be in 5 years, 10 years, and more.
Third, discuss the martial home with your attorney. While the home may be the largest marital asset, it may also carry either a positive or negative emotional attachment. Does it need to be retained or should it be sold? Are the mortgage payments and housing costs reasonable on a single income? Is downsizing to a home that is more affordable a better option? At the end, the home will be all yours and not one filled with memories of a former marriage.
Finally, calculate a budget with the help of your attorney and professional advisors. Think long term and avoid making any huge purchases right away. Take a trip, but don’t take a once-in-a-lifetime expedition. Just yet. Be patient – a little investment now will pay off in the long term.
While there are legitimate reasons to be concerned about finances, there is also the promise of a new bright future.