Figuring out your finances can be one of the most gut-wrenching and scary parts of divorce. You may ask yourself, “Where do I stand, economically, really? What will I need to give up? How will life look after I sign the papers?” Or, you try not to look too closely at any of these things, while fear of the unknown slowly mounts.
Divorcing women typically receive financial advice that is focused on the settlement process itself, the cutting up of the pie. But financial planning for the breakup and your life afterwards is just as important, says Stacy Francis, a certified financial planner and the president and CEO of the New York-based Francis Financial firm.
Francis helps women facing divorce focus on their financial picture before, during and after divorce. Gaining a better understanding of your finances at each stage can result in a more peaceable parting—and more confidence, moving forward.
Six steps to financial fitness in divorce:
1. Do your due diligence before you split.
The financial planning aspect of divorce ideally starts before you’ve made the move to come apart. You want to get a clear understanding of your overall financial picture, as a couple. “It’s not just about understanding the everyday expenses, which many women are often pretty familiar with, but it’s also about having a clear view of what’s in checking, savings, brokerage, longer term investing and retirement accounts,” says Francis.
Other things to think about that many women forget: employer benefits such as restricted stock, stock options and health savings accounts. Look into everything. It can be easier to get this kind of information about your spouse before you initiate the split.
2. Keep calm and on-task.
“This is one of the most emotional experiences of your life,” says Francis. “Many of us just want it to end. We are willing to give up assets, give up money, just to get it over with.” While it makes sense to avoid fighting over dollars, Francis advises not rushing through the financial discussions out of discomfort.
“I recommend that individuals who start the process have the expectation that it is a marathon, not a sprint. Don’t cash in your cards just because you want it to be over.”
Understand exactly what you're agreeing to when you accept a settlement. “Sit down with a financial advisor and have them review the settlement and your financial position—it may not take them much time, and it’s probably a lot more affordable than many people think,” Francis says. She recommends women looking for an advisor visit divorceandfinance.org, which allows you to search for a certified divorce financial planner in your area.
3. Don't swap custody for cash.
Keep custody discussion separate from financial discussions. “No one should be trading financial assets for access to children,” says Francis. “They are separate. Focus first on working out the custody agreement, and only after that move to finances.”
4. Accept the value of compromise.
Throughout the entire process—before, during and after—compromise is really important. If you can enter the process with the understanding that you'll both need to make compromises, you have a much better shot at limiting the stress and friction. "If you went into the divorce process believing that you could continue to have the same budget for clothing, dinners out and vacations, you may need to tweak those expectations. You never want to find yourself compromising on the really important things, but you need to be realistic. You are dealing with a pool of money that has to support two households instead of one," says Francis.
5. Stick to your new financial diet.
Financial success, post-divorce can feel a little like starting a new diet or new exercise routine; you have to stick with the program to get results. Many people struggle to adjust their lifestyle to match their post-split means. “After divorce, unfortunately, our spending habits probably need to change," says Francis. After you spend the time preparing your finances and educating yourself, you need to continually implement your new plan for it to work.
6. Update your plan as your life progresses.
You've established a workable new budget and system, but life keeps moving. Kids get older, we get raises (hopefully), perhaps take on new debt. Working with a financial professional you trust can help keep you on task and continue to make powerful choices with each change. "You need to be updating your will, updating your beneficiaries," says Francis. "You need to build a well-stocked emergency fund. Never stop planning."
Alysia Patterson Mueller is a Brooklyn-based writer whose waking (and non-waking) hours are mostly absorbed by looking after her two-year-old daughter, six-month-old son, and 90-pound black Labrador Retriever. She has a Master's Degree in Journalism from the Medill School at Northwestern University and has worked as an Associated Press reporter. She and her husband are both children of divorce, which makes contributing to Splitopia a meaningful assignment for her.