Divorced Women Are Financially Vulnerable: Here's Why Financial Planning BEFORE Divorce Is Critical
- Alex Beattie
- May 9, 2023
- 5 min read
Updated: Feb 13
Here's a statistic that should get your attention:
The poverty rate for separated women is 27%—nearly triple the figure for separated men.
Let that sink in for a second.
Divorced women are one of the largest groups of financially vulnerable people in this country. And it's not because women are bad with money. It's because divorce fundamentally changes women's financial realities in ways that men often don't experience.
If you're not financially prepared in advance of divorce, you're putting yourself in a precarious position for life after. But here's the good news: if you make the time to prepare before a separation or divorce, you can create a plan to navigate the financial changes ahead with confidence instead of panic.
The sooner you start, the better off you'll be.
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Divorce can be an expensive process for anyone. But it's often more financially devastating for women, especially if you took time away from the workforce to be a stay-at-home parent or care for a loved one.
That career gap doesn't just affect your current earning potential—it affects your retirement savings, your Social Security benefits, your professional network, and your future career trajectory. Divorce can mean changing careers or finding a new job altogether, often at a time when you're already dealing with massive emotional and logistical stress.
This is why financial planning isn't optional. It's essential.
As a woman going through divorce, understanding your financial reality and planning for your future can mean the difference between struggling to make ends meet and building a stable, independent life.
Here are some steps to help you start financially planning for your divorce and life after:
Step 1: Communicate Openly With Your Partner About Finances
Look, I know talking about money can be a hot-button topic for couples. But if you're able to have open conversations with your spouse about your financial realities and how they'll change after divorce, it can save you time, money, and stress later.
Be sure to discuss any debts that need to be paid off, how you'll handle joint accounts during the separation, and what financial information you both need to gather. It's important that both parties are aware of these terms so there are no surprises down the line.
Once you've talked it over, make note of the conversation. Even a simple email between the two of you summarizing what you discussed can help clarify points later if memories falter or things get contentious.
That said, if your spouse is controlling about finances, unwilling to communicate, or there's any history of financial abuse—skip this step and move straight to gathering information on your own with the help of professionals.
Step 2: Assess Your Financial Realities
Before you can build a plan for the future, you need to understand where you are right now. That means knowing what money is coming in (your income) and what's going out (your expenses).
Think of every expense you have over a year and break it down into months. And I mean everything—not just rent and utilities, but car insurance, subscriptions, kids' activities, haircuts, vet bills, gifts, all of it.
Most people drastically underestimate their actual spending. Getting clear on your real numbers is critical because this is what you'll use to determine what you need to maintain your lifestyle post-divorce.
Need help with this? The Divorce Planner's monthly budget calculator walks you through every possible expense to consider, and has all the tools you need to assess your finances now and for the future. How easy is that?!
Step 3: Educate Yourself So You Know What You'll Need To Negotiate
The most important thing you can do is educate yourself before you start negotiating. You need to know what you're entitled to, what you need to ask for, and what your priorities are.
Start by scheduling consultations with local family law attorneys and mediators. Many offer free initial consultations—ask before booking. Come to these meetings prepared with your financial documents, a list of your assets, and specific questions about your situation.
The more organized you are, the more you'll get out of these consultations. And the more informed you are, the better decisions you'll make.
Not sure where to start with getting organized? Check out The Divorce Planner Get Organized Bundle. It walks you through everything you need at your fingertips before meeting with attorneys or mediators.
You should also consider working with a CDFA (Certified Divorce Financial Analyst) who can help you understand the long-term financial implications of different settlement scenarios. They can model out what your financial picture will look like five, ten, twenty years down the road based on different agreements.
This kind of strategic financial planning can literally save you hundreds of thousands of dollars over your lifetime.
Step 4: Determine Your Future Financial Needs
When you're in the middle of divorce stress, thinking about retirement can feel impossible. But planning for your future is critical—especially if you took time out of the workforce to raise children or care for family.
You need to think about retirement savings, health insurance (this is huge if you've been on your spouse's plan), college savings for your kids if that's a priority, and major expenses like buying a home or a reliable car.
These things may seem far off, but they happen sooner than you think. And if you don't negotiate for them now, you'll be starting from scratch post-divorce.
If you were a stay-at-home parent, you may be entitled to a portion of your spouse's retirement accounts, Social Security benefits based on their earnings record, and potentially spousal support that allows you to retrain or re-enter the workforce.
But you have to ask for these things. They don't just automatically happen.
Figuring out in advance what you need to negotiate for retirement and long-term financial security is absolutely critical.
PRO TIP! Don't Forget Often-Overlooked Expenses
As you're planning your post-divorce budget, make sure you account for expenses that people often forget about. Things like establishing credit in your own name, updating legal documents (wills, beneficiaries, power of attorney), potential therapy or coaching costs, childcare if you're returning to work, and one-time costs like moving expenses or furnishing a new place.
Being proactive is always the best place to be when going through big life challenges.
Divorce is never easy, but you can lessen the financial stress by planning ahead.
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