How Will Divorce Affect Me Financially?

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“How will divorce impact me financially?” A stable marriage is one of the best paths to building and maintaining wealth. Divorce, on the other hand, is expensive. Possessions, money, financial assets, and debt acquired during (and sometimes before) marriage are divided between former spouses. In fact, divorcing individuals need a more than 30% increase in income, on average, to maintain the same standard of living they had prior to their divorce.

How does divorce financially affect women?

Generally, women suffer more financially than do men from divorce. The financial burden is greatest during the first year after divorce and varies depending on: (1) how much money the woman contributed to the family income before divorce, and (2) the ability and willingness of her former husband to make child support payments.

  • About one in five women fall into poverty as a result of divorce. (The 2014 poverty line for a family of three is less than $20,000 a year (click here).
  • About one in four women lose their health insurance for a period of time after divorce.
  • About one in three women who own a home and have children at home when they divorce lose their homes.
  • Three out of four divorced mothers with child-support orders don’t receive their full payment.
  • Women often need the help of public assistance programs to supplement their family finances, which often still fail to cover all financial necessities after divorce.

Although mothers usually suffer financially from divorce, some research says that in recent years this situation has improved.

How does divorce financially affect children?

The financial burdens of divorce cause children to spend less time with parents, have fewer extracurricular opportunities, lose health insurance, and refrain from going to college.

  • Less time with parents. Children with divorced parents spend less time with their parents. A parent who previously stayed at home or worked only part-time may need to work full-time after divorce.
  • Fewer opportunities. Children with divorced parents often cannot experience the “extra” opportunities such as music lessons, summer camps, sports, choir, and drama because of strained finances.
  • School. Children from divorced homes struggle more in school and are less likely to graduate from high school. They are also less likely to attend college because they lack the financial support to enroll.
  • Insurance. Some children will lose insurance coverage, and others will face medical expenses not covered by insurance, such as a chronic illness or orthodontic care.

These public assistance resources may be useful for children whose divorced parents face financial challenges:

How does divorce financially affect men?

Most men experience a 10–40% drop in their standard of living. Child support and other divorce-related payments, a separate home or apartment, and the possible loss of an ex-wife’s income add up. Generally:

  • Men who provide less than 80% of a family’s income before the divorce suffer the most.
  • On the other hand, men who provided more than 80% of a family’s income before a divorce do not suffer as much financial loss, and may even marginally improve their financial situation.
  • Fathers with custody or who share custody of children have additional expenses.
  • Often, men’s earnings are “garnished” by the state. In other words, money they owe for child support is taken directly out of their paychecks. One man we know was divorced three times, and most of the money from his paycheck was gone before he got it. He was unable to get his child support orders amended despite his declining income.

TwoofUs and Mint provide more information on divorce’s financial effects on families.

  • This exercise will help you understand your finances following divorce.

How might divorce financially affect my community?

The success and failure of our marriages have consequences beyond our personal lives. Society takes on a financial burden when marriages fail.

Divorce is one of the most common ways that people, especially women and children, fall into financial difficulties. When this happens, they become dependent on government programs, services, and supports. Divorce and unwed childbearing cost U.S. taxpayers at least $112 billion each year. Another study estimated the cost of divorce in Texas alone to be $3 billion each year. These costs are just for public assistance programs (welfare), not the cost of the divorce itself (lawyer and court fees, counseling, mediation, etc.).

In addition, children from divorced homes are more likely to get involved in crime, which pulls apart the threads of civil society. Children from divorced homes also struggle more in school, are less likely to graduate from high school, and are less likely to become productive citizens.

Individuals at the crossroads of divorce help not just themselves and their families, but their neighborhoods, communities, and nation if they are able to repair their relationships and re-establish a healthy, stable marriage.

Find the research support here.

Exercises