Life and finances after divorce for women.
Life and finances after divorce for women.
“Better the devil you know“ is a phrase that often applies to women who are trapped in an unhappy marriage, particularly those that are wholly dependent on their husband for income and managing the household finances. The stress of breaking up the family is compounded by the requirement to secure an independent income, accommodation and manage money to the extent that many women choose to stay in an unhappy marriage, rather than face an uphill battle for independence. This attitude is often adopted by women that gave up work early to raise a family and don’t have a career or up to date qualifications to fall back on. There is hope though.
We often advise women on their finances after divorce and our conversations cover anything from investing lump-sums for income, cash-flow modelling, preparing mortgage capacity reports, protecting maintenance payments and advising on tax-efficient asset division. With the finances taken care of, it leaves room for women to rediscover themselves, find a fulfilling career if necessary and look forward to a happier, independent future. What’s important though is that women are confident in their financial position as soon as possible before going it alone.
A plan for independence.
When preparing to leave an unhappy marriage and seeking an independent life, there are a few core topics that need to be dealt with.
Where will you live in the short and long term after divorce?
What sources of income will you have after divorce?
Do you need to upskill or retrain before separation?
What do you need to know about household finances?
With these questions answered, you will have much more confidence in your finances and life after divorce.
Where will you live in the short and long term after divorce?
Deciding where you are going to live after a divorce is one of the most important factors to consider. Life in the marital home can often be seen as a gilded cage, particularly when your spouse is providing for you and keeping the roof over your head. Unfortunately, this often means that they hold power over you and any reasonable discussion becomes difficult. With this in mind, finding alternative accommodation with friends, family or in rented accommodation may help show you are serious and level up any conversations. In many cases, this short-term upheaval can actually force some difficult conversations and the time apart can bring you back closer together. If that’s not the case, then finding your own accommodation during the divorce proceedings is beneficial as this can be an incredibly stressful and adversarial time, not least when assets are being discussed and divisions agreed upon.
In the longer term, you may need to come to terms with living in more modest accommodation than you may have been used to in the family home. Whether this home is paid for from the sale proceeds of your previously jointly owned property or it is funded from your future income, it’s often best to find somewhere that has minimal running costs and low maintenance requirements - new build homes are excellent for this as they are highly energy-efficient and require no maintenance, so you are free to start planning your future. After a couple of years, you will have a better idea of your income and expenses and you can then decide on more suitable accommodation, but in the short term, it’s always best to leave yourself some headroom and keep your overheads to a minimum.
What sources of income will you have after divorce?
Your income after divorce totally depends on the level of independence you had leading up to the separation. Some will have kept a full-time career, others may have taken a part-time job whilst raising a family, while many gave up work to take care of the home full-time. Equally, the outcome of any asset splitting with your spouse and maintenance commitments will also have an effect on your income and you may need to make investment decisions.
Furthermore, once you are separated, you will become your own household and may well be entitled to receive new or increased benefits that as a couple, you were previously exempt from - this could make a big difference to your income when you are starting out.
Before separation, it could be worth starting a side-hustle around your current commitments to build some savings and provide income after your divorce. We’ve recently written an article on this.
You will also need to consider your future income in retirement. Do you have your own pensions or are you due a share of your ex-spouse’s? This is a really important point to address early on as what you agree as part of the divorce settlement can have a major impact on how comfortable you will be later in life.
Do you need to upskill or retrain before separation?
There’s nothing wrong with entry-level jobs such as those in supermarkets or warehouses as these can provide an income within a few weeks and they can be very flexible. However, it could be that you are underselling yourself in the long term and losing out on a much higher income and job satisfaction. When thinking about a fulfilling career, start with:
What types of activities are you good at?
What you are passionate about?
What results matter to you?
Where could you do this type of work?
With this in mind, the next step is to use your existing contacts, friends of those contacts and put yourself in the right place so that when an opportunity arises, you are in line for an interview. There’s a career coach in the USA called Ken Coleman who has some excellent books and podcasts about finding a job you love and it’s all transferable to life in the UK.
It is also worth considering any gap in your skills that may be stopping you from finding the career of your dreams so it’s never a bad time to enrol on training courses or recertificate.
What do you need to know about household finances?
Household finances can be a little daunting if you’ve never had to deal with them before. However, in reality, they are quite straightforward. It’s just a case of knowing your income coming in, managing the expenses going out and funding for your retirement and savings in-between. This is the basics of building your household budget and we have a much more in-depth article on how to make a household budget work for you.
Essentially, if the money coming in is greater than money going out and you have a rainy day fund alongside a pension - you are ahead of most of the UK.
What’s next?
Divorce is never easy, even when it’s an amicable separation. When it’s a hostile situation, it can be much worse. However, understanding your finances before and after divorce helps to puts you in a position of independence. And knowledge is power. Whatever stage you are at in the divorce process, you can speak to our Divorce Finance Experts right here in Tunbridge Wells. We advise clients across Kent, East Sussex and the UK.
This article offers information about financial planning and should not be taken as personal advice.