If I told you there was a 40–50% chance that your income could drop by 41% at some point in the future, would you want to know how to avoid that? Presumably, most would say yes. Surprisingly, however, this is exactly the situation that many women are in, whether they realize it or not.
Presently, 40–50% of marriages in the US end in divorce. And, according to the most recent figures from the US Government Accountability Office, women’s finances tend to drop by 41%, on average, after a divorce (men’s, by comparison, tend to fall by about 23%). This makes sense, when you consider that women make, on average about 84 cents for every dollar earned by their male counterparts, according to the Pew Research Center. When a woman in a two-income household (shared with a husband) suddenly finds herself alone in a single-income household, she’s going to be taking a steeper pay cut than her ex.
So, it would seem that the financial deck is, statistically speaking, stacked against women who find themselves, willingly or unwillingly, facing divorce. But there are some things that women can do to even the playing field—at least, a little.
1. Get informed. Even now, in the first quarter of the twenty-first century, the majority of women in marriages say that they don’t concern themselves with the family’s larger financial picture, or that they “leave that to their husbands” (and it’s not just Boomers; more than 50% of Millennial women say they defer to their male partners in money matters). If women are ever going to have a chance of coming to the table with equal leverage, they must avail themselves of all the knowledge they can gather. That means that women in marriages need to know about the retirement accounts, the real estate, their partner’s share of ownership in any businesses, and all the rest of it. And by the way, even women in a perfectly happy marriage need to know all these things, too. After all, the unexpected can happen to anyone, and trying to get up to speed on all your financial matters while grieving the unexpected death of a spouse can be every bit as wrenching as divorce.
2. Gather your team. Talk to friends, family members, or other trusted persons to get the name of an attorney you can trust. Start talking to them as soon as possible. If you can’t get a referral that way, contact your state’s bar association. Many attorneys offer an initial free consultation, which is enough to help you decide if they’re a proper fit for your needs. If you’re worried about how to pay them, talk to them about a payment plan or consider a personal loan. If you’ve got a financial advisor, they need to be in on your planning, also. You may feel alone, but you’re not. You can’t successfully navigate a divorce as a solo act.
3. Build your budget. The more you can plan ahead for how much you’ll have to spend, how much you can save, and where your sources of income are, the more confidently you can move into your new phase of life. The key here is to keep your focus forward, rather than backward. Your budget should include adequate child support funds, if you’ve still got children living at home (and in the vast majority of cases, the mother of the children will be the primary custodian and caretaker). By the way, this is where a qualified, professional financial planner can really be a valuable ally by helping you accurately anticipate future needs and helping you find the resources to meet them.
At Empyrion Wealth Management, we specialize in advising women in transition, including those going through the rigors of divorce. We can provide sound advice backed by years of experience as we work with you to forge a plan for building a successful financial future. To learn more, click here to read our whitepaper, “Suddenly Single: Financial Independence for Divorced Women.”
Stay Diversified, Stay YOUR Course!