5 ways to ensure you end up on sound financial ground if your marriage ends.

By Alisa Wolfson
August 18, 2020
A divorcing couple standing on a pile of money
Credit: Getty Images

After nine years of marriage, Dani B., a 35-year-old mother of two in Los Angeles, says she’s never felt more financially free now that she’s divorced. “I had a million dollars cash in the bank three years ago and now I have less than $10,000, but literally never felt better.” 

Throughout her marriage Dani—who didn’t want to reveal her last name to protect her family—let her ex-husband handle their finances because, at the time, her husband made more money than she did and he enjoyed keeping track of everything. “To be honest, I liked the convenience of not having to pay attention,” Dani says. “He handled the main accounts and I used the joint checking account to pay the bills.” She admits that every time she checked the account, there was always $30,000 available to pay the bills, and if it dipped below $20,000, her then-husband would move more money in. “I was so distracted by raising my kids and handling home life that it was an easy, yet irresponsible, choice to let him manage the lion’s share,” Dani says. 

By the time Dani filed for divorce, she says her net worth had dwindled from roughly $1,000,000 to under $50,000 without her knowing, all because of her ex’s poor decision making and bad investments. “Looking back, I was really stupid,” she says. 

But now, though she doesn’t have a pile of loot in the bank, she’s far better with money. “I got divorced, got a job that pays well after not working for six years, and … I’ve never felt more safe in control of my life,” Dani says. She adds that she doesn’t have much, but just knowing where every penny is, where every penny is going and where every penny comes from has made her feel lighter, hopeful and free. “Everything is mine, and it’s free and clear,” says Dani.

It’s a story that experts hear often enough. Nearly 40% to 50% of married couples in the United States may end up divorced, according to the American Psychological Association (APA)—with money squabbles being one of the most common reasons marriages come to an end, only second to infidelity. And though divorce tends, at least initially, to harm your finances—one study found that women’s household income plunges 41% after a divorce, almost twice the size of  men’s income decline—for some people it pushes them to take control of their finances. “They often become financially sound because of a combination of factors,” says research analyst Simon Zhen, “which may include learning from money mistakes from the previous relationship or taking control of one’s individual finances—possibly for the first time ever.”

That’s what happened to Maggie Y., a 36-year-old in Seattle who divorced her husband after three years of marriage, and in doing so gained control over her finances. “I felt more financial freedom after my divorce because there was nobody else trying to control my money and telling me how to spend it,” she says.

While she says she handled the couple’s finances and bill payments, her former husband was controlling about their budget. “He set really tight budgets, like $100 per week for food and $25 per week for fun,” says Maggie. Today, Maggie says she’s relieved that she never has to check her accounts to see if she has enough money to spend on happy hour or dinner with friends. “What I do with my money is my decision now,” she says.

If you’re divorcing, or already divorced, here are five ways to ensure you end up on sound financial ground:

Get what you deserve. Maggie says that one big reason she feels she landed on good financial footing following her split was because the former couple evenly divided what was made during their marriage, so she ended up with more than she started with. “That was nice because I felt like I lost three years of my life in the process,” says Maggie. To ensure that you get what’s owed you financially, it may help to bring in a mediator or an attorney (though attorneys are often very expensive). Here’s how to decide what makes sense for you.

Transfer assets wisely. Once you get what you’re owed, transfer those assets in a savvy way; get a certified financial planner to help you, if needed. “Let’s say you get half of your partner’s 401(k)—you don’t have to cash that out because you’re not an employee of the company. You can transfer it to an account of your choosing, tax-free if it’s a qualified plan, and let it continue to grow,” says family law attorney Penelope Hefner of Sodoma Law Union.

Try to embrace this as a growth opportunity. Financial therapist and Prudential’s financial wellness advocate Amanda Clayman says there’s a lot you can get stuck on in terms of loss and differences between your new life and the life you were familiar with. “The good news is that you get to create new systems according to what works for you,” says Clayman.

Enlist a pro to set you on a new financial path. “My first recommendation is to involve a financial expert to assist you in learning about your money, your spending and your savings,” says NYC-based matrimonial law attorney Jacqueline Newman. During that process, be sure to go through your credit report to make sure everything is in order in terms of where your money and debts are held, says Clayman. “If you’re trying to rebuild your credit, it’s important not to get so fixated on your credit score that you equate it with your self-worth. Some of the damage to your credit might a result of your relationship, not your personal choices.”

Create a budget. Hefner advises against guessing one’s reasonable needs and expenses. “Look back at least 12 months to see what you have historically spent and make sure you take into account expenses that may be new post-divorce,” says Hefner. “You may owe more in income taxes if filing separately or you may owe taxes and penalties if you decide to cash out retirement early.”