When we hear that a friend is getting divorced, our minds tend to go straight to the emotional implications. We want to offer support and a shoulder to cry on, cups of coffee, and vent sessions. But we don’t think about the practical woes of divorce as often as we should — specifically with finances.
Money might not be where our minds go immediately, but it is a huge concern for everyone who’s ever been divorced, whether their split is amicable or not. For those who haven’t been the partner who handles finances in the marriage, there is the added risk of being left in the dark about their financial health.
What Is the Financial Literacy Gender Gap?
This is the unfortunate status quo for many women right now: Despite the cultural shift toward a stronger pursuit of gender equality, there is still a financial literacy gender gap. Only 31% of women who live with a partner say they feel primarily responsible for financial decisions, according to consumer research firm Hearts & Wallets.
The result is that if a relationship ends, women often find themselves piecing together their financial lives without information or experience. Many have spent their marriages intimidated or unsure of how to take the lead with money — even those who are capable. According to a study by the ZEW-Leibniz Center for European Economic Research, women answering a financial question will often select “do not know,” even when they might actually know the answer.
Ultimately, when it comes to dealing with money in relationships and managing finances after divorce, women need to be empowered. Building confidence with financial planning tools and resources is the first step.
How Can Women Educate Themselves and Face Their Fear of Finances?
Ideally, all women should feel comfortable actively engaging in the day-to-day management of finances. They would be confident involving themselves in financial planning meetings and investment decisions — think stocks and bonds, insurance, and estate management.
But if this hasn’t been the case for you and you need help understanding and handling your finances after a divorce, the following strategies are great places to start:
1) Do some digging and don’t be afraid to ask for help.
If you haven’t been the one in charge of finances, then there will likely be costs, assets, and accounts that you don’t yet understand how to decipher and navigate. So you’ll need to do some homework. Utilize resources such as “Clever Girl Finance,” a podcast and education hub; HerMoney.com; and books like “Making Money Simple” and “Work Your Wealth.”
Working with an attorney and financial advisor can help, too. An expert can show you what you don’t know and give you a practical understanding of your assets and the actions you need to take next. The key is finding an advisor you trust — someone who is happy to answer your questions, willing to educate you on your own financial health, and ready to build a long-term relationship.
2) Ask questions about what you have.
A big part of managing your finances after divorce is simply finding out what you’ve got and where it’s located. You’ll need to inventory your assets. And to begin, you’ll need to obtain access to all online accounts that involve you. This can be tricky if the person who has been managing the finances has kept them private, but an advisor should be able to help you uncover everything you need to know.
Keep a log of questions that arise as you do your research. How much does it cost to maintain your home? What about extra costs such as pet care and insurance? How much will you need to keep as a buffer for emergencies? When you arm yourself with information, staying financially healthy after a divorce won’t seem so overwhelming.
3) Make a plan to set and reach future financial goals.
Once you’ve received practical help with finances after a divorce and understand the basics of what you own and where your assets are located, you can turn your attention to a more exciting task: setting goals for your financial future. What would you like to achieve financially in the next five years? How much will you need for retirement or to help pay for your children’s education?
Call on your financial advisor to help you craft a comprehensive plan, and run the data to figure out if you’re on track. Then, lay the groundwork to make your money flourish and meet your goals. This could include automating your savings into an online money market for your emergency fund, setting aside part of your pay into retirement accounts (think a 401(k), Roth IRA, etc.), and opening an investment account for mid-term goals. Even if you start small, you will build the confidence you need to keep growing your wealth.
Many women come out of marriages overwhelmed by what they don’t know. But taking the first step is the hardest part. Learn to look out for yourself, build your confidence, and bring your voice into your financial knowledge and health. What do you want your money to do? Now is the time to start dreaming of — and planning for — the future.
Breaking up is hard to do. We’re here for you:
- HerMoney Podcast: Our Girlfriend’s Financial Guide to Divorce
- How Not to Get Screwed in a Divorce
- Five Rules for Getting Divorced and Staying Financially Stable
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