Divorce can often trigger a cascade of challenging financial issues. The divorce itself can be costly, and people have to divide their property. Statistically, the financial impact of divorce is often much more severe for women than it is for men.
Their income tends to drop, especially if they have young children, and they often exit the marriage with less wealth than their husbands do. It is therefore of the utmost importance for women who divorce to plan carefully for their own protection.
What financial moves can help women improve their economic stability after divorce?
Budget carefully
One of the biggest traps for people who have recently divorced is the desire to consistently maintain the same standard of living. They overextend themselves and then end up dealing with a large amount of debt. Making short-term standard of living sacrifices can yield long-term dividends for those attempting to rebuild financially after a divorce. Finding ways to cut costs can be crucial for those learning to live on one income after a divorce.
Save and invest when possible
Rebuilding lost personal wealth after a divorce is no easy undertaking. It can take years, especially during times when the economy is not particularly strong. Women may need to focus on saving, even if it is only a small amount every month. By doing so, they can accrue a nest egg to help them prepare for retirement and improve their standard of living in the future. Working with an investment professional to optimize the returns on those savings instead of using a market-rate savings account is often in their best interests.
Optimize the divorce process (if ongoing)
The socialization women receive teaches them to be generous, considerate of others and forgiving. That may lead to them accepting highly-unfavorable economic terms in a divorce or feeling guilty about requesting financial support. Women may need to set aside their aversion to making demands on others and approach divorce assertively. They may need to go over financial records carefully with a professional to look for signs of dissipation and hidden assets.
They may need to avoid making concessions just to get the process over with as quickly as possible. They may also need to request not only child support but alimony or spousal maintenance when there is a discrepancy in earning potential or they have made professional sacrifices for the family.
Acknowledging that financial recovery after a divorce can be a long process can help women focus on the future instead of staying bogged down in disappointment. The right financial moves during and after a divorce can make all the difference for women who might otherwise be at an economic disadvantage after their marriage ends.