How Will Divorce Affect Me Financially?
No one can deny that divorce is a stressful time of upheaval and fundamental lifestyle change. This is true on emotional and personal levels, but divorce can also have a serious impact on a couple’s finances. Any financial stability that the family enjoyed could be upset, posing lasting challenges to all parties involved. According to some estimates, divorcing individuals will need more than a 30% increase in income to maintain their standard of living post-divorce.
At the Law Offices Of Cara L. Santosuosso, LLC, our team of Cleveland divorce lawyers cannot offer financial advice, but they can offer insights based on experience. Later on we will get into specific ways to manage finances during divorce, but here we want to discuss the financial impacts that divorce can have on each member of the family. As you work through your divorce or dissolution, keep these things in mind so that we can help you find the very best, most fair outcome.
How Divorce Can Affect Women Financially
Even though things have changed so much in the past few decades, many women today are still not the main contributor to the family’s income. Oftentimes this is because they may have had to take time away from work to raise children, help aging parents, or handle other caregiving tasks. This time spent outside of the workforce can have a permanent impact on their overall earning potential. Once their previous spouse’s income is out of the picture, they could be left shouldering excess debt and childcare responsibilities with less available assets. This is especially true in the first year post-divorce, as a divorced woman adapts to her new life.
Another way that divorce impacts women is that they often take on more childcare responsibilities, and are expected to care for their children with less income. If a former spouse is unwilling or unable to help via child support payments, it could compound her financial burden. Caring for children will always be important to a divorced mother, but the task will inevitably become heavier for her if she no longer has the support of a spouse. After divorce, women may also face the loss of their health insurance coverage if they were listed on their spouse’s policy. Such a loss could be a huge blow, both financially and emotionally.
Since the family home is generally seen as “marital property,” the court may decide, based on each spouse’s financial situation, that it must be sold and proceeds divided equally. This means that a woman may need to relocate, which could impact her availability for employment, the length of her commute, distance from a child’s school, and proximity to friends and family. Even if she is able to keep the family home, managing the costs of repairs, maintenance, and basic utilities can quickly become a burden when working with only one income. To separate her finances from her former spouse, she may need to refinance a home mortgage or other contractual debts, and that process could end up leaving her owing more, due to increased borrowing rates or her personal credit score being the only one taken into account. Credit card use could also become tricky if a wife and husband applied jointly for a card, or if one was the main account holder while the other was just an authorized user.
Women who are older and do not have young children at home can still see a substantial drop in their standard of living–up to 45% according to a recent study. If a woman depended on her husband for financial support and was poised to benefit from their joint retirement savings, divorce later in life could pose a serious risk to her long-term financial wellbeing. Even if she has a substantial 401(k) or IRA, if it was earned during marriage it may be seen as “marital property” and as an asset to divide. On top of all this, there are specific tax implications to consider.
For these and other reasons, some women fall into poverty after divorce. Many others struggle to maintain a comfortable life for themselves and their family. On average, women live longer than men, which means that a divorced woman could be looking at quite a few years of life in which she is solely responsible for her financial needs, with far less capital available.
How Divorce Can Affect Children Financially
We may not initially think of financial strain affecting the children of a divorce directly, but it certainly will have an impact indirectly. Divorced parents may not be able to spend as much time with their children as they previously did, since they have more responsibilities to take care of and potentially limited visitation time. Reduced overall income can also mean that extracurricular opportunities can no longer be afforded, which could leave children without activities that brought them joy, fulfillment, and time spent with friends. At home, children may see less of a variety or even amount of food on their table. Health care is always considered by the court, but depending on the financial situation of both parents, it could be hard to afford the premiums. In general, parents may not be able to provide for the wants and needs of their children as they would wish to.
In the short term, children dealing with the potential trauma of divorce along with disrupted routines and conflicting emotions may need counseling to best work through their situation. Of course, that requires more effort and potentially more financial strain on parents. In the long run, a decrease in standard of living paired with countless other destabilizing side effects of divorce could go so far as to negatively affect a child’s performance in school and even reduce their likelihood of pursuing higher education. This could mean that a child’s future earning potential could be seriously affected by the life situation resulting from their parents’ divorce. Even if the custodial parent receives support from their former spouse, it may not adequately cover the high costs associated with raising a child.
How Divorce Can Affect Men Financially
A study conducted using data from nearly a decade ago found that following divorce, a man’s standard of living dropped by 21% on average. Other estimates put this number anywhere between 10 and 40%. This drop could be the result of alimony, spousal support, or child support payments, along with other divorce-related expenses. Depending on his income and the court’s decision on mandated payments or garnished wages, a divorced man could see quite a bit of his income go towards financially supporting his child(ren) and ex spouse. Other everyday expenses will likely include obtaining a new home, possibly a new vehicle, and taking care of utilities and other household expenses. He may also be held responsible for repaying debt that was assigned by the court. If his ex-spouse was a major contributor to the family’s income, that loss will be felt in his available resources.
All that said, in general, the financial impact or burden on a man following divorce is statistically less severe than it is on a woman. This is true whether the divorce happens while children are young or closer to retirement age.
Divorce Can Have a Financial Effect on The Community
Communities are often made up of many families, and these families use their financial assets to contribute to the financial success of their communities. Taxes paid by financially stable families help to fund society and care for necessary services. When families separate and experience financial stress, this can have a domino effect on their community. Instead of contributing via taxes, parents may instead need to take advantage of available public assistance programs to ensure that children get the care and support they need.
Besides the immediate financial toll, the likelihood that children from divorced families will pursue higher education drops, and thus so does their earning potential along with the hope that they will become the next generation of productive, contributing citizens. While these scenarios are not always the case by any means, they may be made more likely following a divorce.
Work With Experienced Divorce Attorneys in Cleveland, Ohio
When a couple is considering or undergoing a divorce, the financial implications to themselves, their children, and society may not be top-of-mind. However, these are vital to be aware of when making decisions that could affect everyone involved for years to come.
In the end, every collaborative divorce lawyer or child custody attorney aims to ensure the best, most supportive environment for children as they adapt to their new life. At the Law Offices Of Cara L. Santosuosso, LLC, our team of divorce lawyers only want what is best for you and your child. If you are contemplating divorce but need guidance regarding the financial side effects a divorce may have on your family, please contact us. Wherever you are in your divorce process, we are ready to help.