by Amanda Feder
Financial worries and disagreements between co-parents are among the most common stressors discussed by divorcing or single parents. Marriages and divorce impact financial investments, such that divorce can hurt them (e.g., see Christiansen et al., 2015). Further, many individuals have a lot of fears surrounding finances, so it can be the worst enemy when negotiating. Individuals may fear financial hardships, the idea of starting over again, a loss of property, or prominence in a community. This can be incredibly challenging if one has been financially dependent on their ex-partner. Even in the most
amicable co-parenting relationships, parents often argue about assets, child support, extracurricular activities, or other issues related to the financial aspect of divorce; a lot of this is related to fear or emotions surrounding the divorce. So, it's vital to eliminate fears by planning.
Most individuals do not financially benefit from the divorce unless they are wealthy. Although there's not a one-size-fits-all answer to financial agreements in a divorce or separation, there are several things you'll want to consider and or document.
1) MAKE SURE EVERYTHING IS CLEAR IN THE MARITAL SETTLEMENT AGREEMENT AND PARENTING PLAN
• Make a list of all property acquired during the marriage (rental properties, houses, boats)
• Retirement accounts (and pay increases or changes with retirement)
• Health insurance (who will pay for insurance, co-pays, etc...)
• Taxes (e.g., who will claim what child, what year, for how long)
• Expenses related to extracurriculars (e.g., traveling sports, dance, music lessons)
• Cost of children's school lunches or other regular school expenses (e.g., registration, books,
supplies)
• Care for mental health or therapy
• College and other special educational expenses (e.g., private school and legal custody)
• Credit cards in your name or your ex's
• What both co-parents have spent since separation, joint checking account balances
• Gifts/inheritances
2) KEEP EMOTIONS OUT OF IT
In a divorce, individuals are often overwhelmed with emotions in addition to fears, including sadness or
anger. It's important to avoid carrying negative patterns of marriage into the negotiating room and
instead prepare for how you will respond to threats, a co-parent's anger, or conflict. Mediators are an
excellent resource for divorcing parents, especially in high conflict situations. Mediators are often
significantly cheaper than attorneys, and they can help parents work through conflicts and negotiate
finances before one pays an attorney three times as much.
3) KNOW YOUR RIGHTS Attorneys and mediators know the laws and how judges typically respond in a given county. In most counties, men and women have equal rights concerning finances; yet, this will likely differ depending on various circumstances, including the length of the marriage, issues with the law, or involvement in child welfare.
4) FIND/CHOOSE THE HOUSING OPTION THAT MAKES THE MOST FINANCIAL SENSE FOR YOU
If you or your partner owned a home together, you would likely divide the house's equity in negotiations. Some individuals want to keep the home for emotional reasons, though consider your financial situation. Often, it's not just factoring whether or not one can make the payment into decisions. Instead, individuals also want to think about homeowners fees, taxes, indoor and outdoor maintenance, and other things it would take to maintain or increase the home value. If a parent does not believe they will stay there long term and cannot afford to buy, renting may be in their best interests.
5) PLAN YOUR POST-DIVORCE BUDGET BEFORE YOU SIGN DIVORCE OR PARENTING AGREEMENTS
Planning your budget of signing divorce or parenting agreement paperwork is critical. It's essential to think about details and not underestimate current or long-term expenses. Expenses often include housing, groceries, phone, electricity or gas, water, sewer, trash, cable television, maintenance/repairs, child care, tuition, pets, transportation, personal care, insurance, loans, taxes, gifts, and entertainment among a few things.
Resources for budgeting and your financial health
Financial experts with books, resources, and websites: Dave Ramsey or Suze Orman
US News - 10 Simple and Free Budgeting Tools
US News - 10 Simple and Free Budgeting Tools Videos: Finances during divorce Getting a divorce: How do a stay out of debt?
How to start post-divorce - Dave Ramsey
Christiansen, C., Joensen, J. S., & Rangvid, J. (2014). Understanding the effects of marriage and divorce on Financial Investments: The role of background risk sharing. Economic Inquiry, 53(1), 431–447. https://doi.org/10.1111/ecin.12113
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