Ask the Money Coach: What Do I Need to Know About Divorce
Let’s face it. Most people don’t have access to a financial advisor. And if they do, those financial advisors may not take into account the human side of managing money – like how spending, saving, and stressing about it actually makes us feel. That’s why we’ve brought in the Nav.it money coaches* to answer all your money questions.
E-mail our money coaches to be featured and have your questions answered anonymously, like this reader who survived the holidays with his partner but just can’t stick it out any longer.
Dear Money Coach,
I’ve been with my wife since high school. We basically grew up together and went through most major milestones together. The thing is, we’re just not healthy together.
After a years-long rollercoaster ride, I’ve concluded it’s time to file for a divorce.
We have tried couples counseling. It helped temporarily, but this Christmas was the last proverbial nail in the coffin. Actually, it was like a series of nails shot out of a high-powered nail gun. We disagreed about literally everything.
The problem is that the idea of actually filing is pretty daunting. Not the emotional part but the financial aspect of divorce. I’m just so done. We never signed a prenup or anything.
What do I need to know about money before I file?
Dear Contemplating Divorce,
First, I am sending you lots of positive energy. Divorce can be both a liberating and incredibly painful experience. My first suggestion is to get a therapist, take time to self-reflect on how you got yourself into the relationship, and see if your health insurance will cover as much self-care as possible. Massage anyone?
Manage divorce like you manage a business transaction
Second, marriage is legally very similar to a small business. Splitting up any small business takes some work and legal action. States have jurisdiction in divorce cases, so it matters if your state is a community property state and their laws/precedents regarding parental custody. Research your state’s divorce laws. A judge or moderator will most likely decide your divorce details so getting legal help is advisable. This is especially necessary if you think your soon-to-be former partner will not be amenable to the process.
Managing more than money during a divorce
Asset division, or deciding who gets what, can be complicated. Prenups are starting to be trendy in younger generations. Still, they only shield the assets each person brought into the marriage, not necessarily the assets gained during the marriage.
Cost of divorce
My research shows the average (mean) cost of divorce was $12,900 in 2020, while the median cost was $7,500. An uncontested divorce, or one with no significant contested issues, averaged about $4,100 in 2020. However, divorce costs can quickly increase if there is contention on either side since lawyers are usually paid by the hour. Plus, courts or moderators charge fees.
The cheapest way to manage a divorce is to try and agree on the terms with your soon-to-be former partner before you go to lawyers. That’s often VERY hard to do, as emotions run high during breakups, but it is only to your advantage to try and find the healthiest and most efficient way to get out of the marriage, especially if children are involved.
When kids are involved in divorce
Most of the time, the divorce decree allocates how you divide your joint assets and, if you have children, how you share custody. Most states have formulas that are pretty straightforward about who owes who child support or alimony.
Take it from me; another golden rule of divorce is to never put your kids in the middle of your adult relationship problems. They are innocent humans that should be protected and shielded from the realities of your breakup as much as possible. Their world is reeling, too. Don’t be selfish and try to rope them into negotiating on your behalf, discussing the other parent with you, or forcing them to choose between their parents.
Finally, be nice to yourself. And maybe try to be nice to the to-be goner, who is probably hurting too. You’re not alone; there is no shame in divorce. People get together, and they break up. It’s a part of life. Make sure you care for yourself, set boundaries from a place of forgiveness, and protect your kids as much as possible to get through a difficult moment of your life as unscathed as possible. It’s also a great learning opportunity. What can you learn from the experience to avoid repeating the same relationship patterns again?
Remember, if you’re thinking about divorce
Think of it as breaking up a business with 50-50 ownership
*Just remember, we are NOT your financial advisors, tax advisors, or legal advisors by simply accessing this site. Everything that you read or interact with on the site is for informational purposes only. You should contact a professional before taking action.