Divorce can have a huge impact on your life and your finances. No one plans to get divorced, but the reality is that 42% of marriages end in divorce*.
Women often take the bigger financial hit when getting divorced with their income likely to drop. This means women are more likely to struggle with their finances after divorce. Below are some financial tips to help you through the process.
Tip 1 – agree what you can without lawyers
Legal fees when getting divorced can be staggering, particularly if it goes to court.
If you have a reasonable relationship then it makes sense to agree what you can without involving lawyers. For this to work, you need to be willing to work together and compromise.
Mediation is another cheaper alternative where you can discuss what you both want from the divorce with a single lawyer present.
Tip 2 – don’t forget to include your pensions
When getting divorced, most people prioritise keeping the house and working out a new family dynamic.
However, a common mistake that women often make is overlooking the value of pensions that you both might have.
After the house, pensions are likely to be your biggest assets and, in some cases, pensions are actually worth more than the family home. However, many women give up any pension rights in exchange for keeping the house. This is likely to create more stability in the short term but it is important to consider what position this will leave you in when you come to retire and you no longer have access to any of the pension assets.
Pension sharing is an option that women should consider. It is complex and it is important not to rush any decisions.
A financial adviser at Four Wealth Management can explain to you how pension sharing works when getting divorced.
Book a no-obligation meeting now
Tip 3 – your lawyer cannot give you financial advice
Your lawyer is likely to have helped you through the process and is someone you feel you can trust. However, your lawyer can only help you to divide your assets; a lawyer cannot advise you on how to rebuild your finances after divorce or give you financial advice.
Now that your joint assets have to support two households instead of one, it is likely that your income will have dropped and you will be in a worse financial position.
Once the divorce is finalised or when you are in a position to understand what your financial position might look like, you should work on a financial plan. A financial adviser at Four Wealth Management can help you with this.
Book a no-obligation meeting now
Understanding what your new income and expenses will give you peace of mind once you have clarity on your position and also give you a better chance of rebuilding your finances. You should focus on rebuilding your emergency savings and make sure you do not neglect your pension, particularly if you have given up rights to your ex’s pension.
It is also important to review your Will now that you are divorced as it is likely to have included your ex previously.
You should also do a full review of your protection policies and make sure you have life insurance and any other cover you might need such as income protection now that your financial position has changed.
Book a no-obligation meeting now to help you rebuild your finances
*ONS, ‘Divorces in England and Wales’, 2022
Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills are not regulated by the Financial Conduct Authority.
