In the first part of this series, Carla Dearing, CEO of SUM180, an online financial planning service created by women for women, shared tips to help women create financial security during and after divorce, stressing the importance of keeping emotions in check, leaning on support networks, and understanding your financial picture.
“While divorce is wrenching for all, women are particularly vulnerable to financial disruption,” says Dearing, adding that the first year after divorce, the wife’s standard of living may drop almost 27%, while the husband’s may increase by as much as 10%.
Dearing shared more tips that can help women avoid common financial pitfalls during this disruptive time.
Pitfall: Accepting your spouse’s word about family assets.
You may be tempted to check out mentally, but you will get much closer to a fair settlement by staying attentive, engaged and–above all–skeptical throughout this process.
What to do: Demand financial documentation.
Even if the negotiations are proceeding amicably, do not simply believe everything your spouse says about his finances. Verify the facts independently and document, document, document. Pay close attention to your spouse’s lifestyle and spending habits. If you suspect your spouse is being less than forthcoming about his income or assets, ask your lawyer for advice immediately. Your lawyer may recommend consulting a forensic accountant to uncover your spouse’s assets. You may also be able to force your spouse to produce financial documentation in court.
Pitfall: Clinging to the family home.
Many women feel they need to keep the house–no matter what–because they’ve lived there for years and it represents home for the kids. This impulse is understandable, but now that your financial landscape it about to change (perhaps drastically), it is not necessarily wise.
What to do: Â Do the math, then be brutally honest with yourself.
Will you have enough future income to maintain the house? Remember, maintaining the house means more than paying the mortgage; it means covering utilities, upkeep, and repairs, as well. Once you set aside your emotional attachment to the family home, you may realize that moving to a small condo is best for your peace of mind.
Pitfall: Focusing on petty property battles rather than the big picture.
As you take inventory and divide up assets, it’s easy to get caught up in battles over relatively minor possessions like furniture or memorabilia. This sucks up time and energy you and your lawyer should be spending on bigger items, like alimony, child support, or the house.
What to do: Be a savvy negotiator.
Be willing to compromise on non-essentials and save your legal and emotional resources for battles that will make a real difference for your long-term financial well-being.