When I decided to divorce my first husband (quite a few years ago now), I thought I was in pretty good shape financially. OK yes, I was paying off two mortgages at the time but my ex was reasonable and quickly agreed to my equitable division of our assets. We had no children, so I thought I would be fine.
That first year was really hard though. I had tried to put some things in place – renting out a spare room to a tenant to help cover the mortgage, making sure I had a good stash of savings in my account in case of emergencies – but it was still difficult. I hadn’t realized how much more easily two can live for the cost of one. I had definitely under estimated my partner’s financial contribution!
If you’ve suddenly discovered that your marriage is crumbling, or you think it might soon, here are some tips that might help.
Many of my divorcing friends have spoken to me about their financial woes over the years. As an expat in a foreign country, away from your family and support network, this can be really scary.
If you didn’t sign a marriage contract, find out how the laws of your adopted country will affect your financial separation and separation of assets. While every case is different, I think there are a few guidelines that should help no matter which situation you are in or where you live.
Don’t rush into decisions
The number one rule is – don’t make any big decisions straight away. It is the same advice for someone grieving: you’re suffering from the death of your relationship and you’re probably feeling rather frazzled and vulnerable. Make sure your cash savings are well stocked and any credit cards or personal loans paid off, then just leave any significant decisions until things calm down a bit. Stability is important if you’re going through a rough time emotionally.
Some men will get vicious when a relationship is breaking up and try to take it out on you financially – especially if you’re the one leaving. The temptation is to say, “Oh whatever, you take the money, I just want to get on with my life.” While I can understand this perspective, be very careful that you don’t give too much away.
In fact, I would even say resist telling him what you really think of him (for now) until the financial negotiations are over (you can get your revenge later). If you have to play sweet for the moment in order to end up later in a financially stronger position, do it – particularly if you have children.
Getting a divorce weakens your finances
Women are the poorest people in our society for good reason – we get paid less, live longer, are more likely to take career breaks for family and more likely to be a single parent. Divorced women in France have lower savings than either single or married women.
This is not the time to take the moral high road and declare, “Money isn’t important to me”.
It might feel unimportant when you’re in a relationship with a wealthy man who is paying the mortgage, but the minute that relationship is over you’re going to have to stand on your own feet financially and that can be really hard if you’re not used to it. Even if your ex earned the same or less than you, you will learn that living on your own again, especially with kids, can be hard. Think of the long term (you’ll most likely live much longer than him) and get as much money out of the split as you can while maintaining your dignity.
I know I’m going to get mail for this stance, but I have seen too many women messed about by their partners while in the relationship and then messed about by them financially once it’s over.
7 tips to adjust to your new financial situation
If, as a result of your divorce, you find yourself with a large lump sum of money what should you do?
- Pay off credit cards, personal loans
- Make sure you have a cash buffer (at least 3 month’s salary)
- Make sure your accommodation is sorted out. This might mean making sure you get to stay in the family home (maybe negotiating a compromise of some sort here), making sure you have enough money for a deposit for an apartment or other home, making sure you have enough money for a deposit if you plan to rent. Don’t hold off waiting for your dream home, just get a roof over your head and some stability for yourself and your kids if you’ve got them. If your fortunes improve in the years ahead, then you can think about getting back to your dream home, but not now.
- Take a good hard look at your financial circumstances, credit card debts, savings, investments, everything and make sure you are really clear on everything you have and where you stand – even if it’s scary. Burying your head in the sand won’t help anyone, least of all you.
- At first, make conservative, careful, well-thought out decisions. Get advice from a professional, not just your mum/best friend/colleague. If you were hiring a plumber you would shop around, similarly if you need financial advice, shop around and get advice from at least five people.
- Once you have paid off debts, secured a cash buffer and are in your own home and feeling comfortable with covering all the bills, then you can start thinking about other investments – but not before. Don’t invest if you think day trading on the stock market could boost your income (which you find insufficient at the moment). Don’t invest because your ex-husband did and well, if he can do it… Don’t chase anything that could be loosely defined as “fast money” or a “get rich quick scheme”. Most of those schemes just make you poorer. Building real, lasting wealth takes time, patience and a good understanding of the fundamentals, so it’s a good time to start educating yourself. A good money book with no financial jargon is “The Richest Man in Babylon”. I first read it over 20 years ago and I still find great ideas in there.
- Get used to living on a lower income. Your income will most probably rise in the future but it won’t help anyone if you keep spending at the rate you did when there were two people paying the bills. That life is over, so take a reality check and use your creativity to figure out how you can get the things you need with less money. It may mean swallowing your pride and asking for some help for specific things from family/friends. I don’t mean asking for cash so you can buy a nice handbag. I mean mentioning that your washing machine has broken down and you don’t have the cash to get a new one. You may find that someone has an old machine they were planning to get rid of anyway. Be very clear about what you need and you’ll find it’ll come your way.
The good news is that in a few years you will have put all this behind you and moved on to bigger and better things. I certainly did, and have absolutely no regrets. Some of the most resourceful and wealthy women I have met are divorced single mothers.