Women & Money: Smart Choices When Facing a Divorce

I recently read “Divorce:  Thinking Financially, Not Emotionally,” by Jeffrey A. Landers.  Talking with women going through divorce over the past few years has convinced me that acting in concert with that title is a significant challenge.  A huge range of emotions—shock, anger, disappointment, guilt—complicate decision making during divorce.  It is a good idea to talk with your attorney or financial planner to have a third party that is not so “involved” in the emotional aspect of the situation.

Despite these challenges, I’ve seen women make some smart choices over the past few years since I became a CDFA (Certified Divorce Financial Analyst).  I’ll share them here.

Get your ducks in a row.  This is always the case when going through any major life change.  If you are the one that is initiating the divorce, do your homework beforehand.  You will need to have a list (and values) of all real and financial assets, along with tax returns for at least the last two years.  If you are caught by surprise, work quickly to at least gather and/or copy the financial documents that are needed before you physically separate.  We have access to several different spreadsheets to help you create an inventory.

Factor in income taxes when dividing assets.  A 401k or traditional IRA and a Roth IRA may have equal account values, but not be equivalent assets from a tax standpoint.  The money in the 401k or traditional IRA could be all pre-tax money, meaning all distributions will generally be taxed as earned income.  For a Roth IRA, distributions could be completely free of income taxes.  Running a calculation will be necessary in order to equalize the true value of these assets in an equitable distribution spreadsheet.

Friends are great, but aren’t the best place for financial advice.  Try to maintain your focus with friends on sharing your feelings and having fun.  Save the financial aspects of divorce for discussion with an expert.  I hear women going through a divorce say they get unsolicited, and often contradictory, financial advice all the time.  This just makes your head start spinning around.  It is very unlikely that your financial life is so similar to someone else’s that all of their choices—even if correct—will apply to your exact situation.  Your pension might not be taxed like their pension, your 401k might not have the same type of contributions as your friend, and their spending habits might not be feasible based on your income.

Prioritize sentimental attachment, but be logical about it.  I understand 100% why a woman would want to keep her minor children in the house they grew up in while going through a divorce.  This can be a really difficult process for children to understand.  If you are attached to the marital home, try to think in terms of the next two years.  Can I afford to keep the house for another two years?  Then, plan from there.   It may be possible to maintain it for two years, while the dust is settling.  However, longer term, it may not be feasible if it needs a new roof or college expenses come into the picture.  There are a high percentage of women that receive the marital home in the divorce, but end up selling it within five years because of maintenance costs.  Remember, previously two incomes were supporting that household, and now there is only one.

Be very careful with what you share on social media, email, or text messaging.  As the old saying goes, a picture is worth a thousand words.  I read about a couple that was divorcing.  After the spouses submitted financial affidavits to the opposing attorneys for review, one spouse began posting pictures of lavish vacations and new car purchases on Facebook.  Turns out, that spouse was hiding income through a self-employed business.  The unwise spouse actually tried to use low income as a basis for spousal support before the Court.  You don’t have to guess how the judge met that request.

Thinking financially and not emotionally is a great idea, but you might need help prioritizing along the way.  Exert your emotional energy when you are talking with your therapist (seeing a therapist while going through a divorce is a great idea) or enjoying time with your friends or family.  Discussing and making financial decisions while working with an expert is definitely a smart choice.


Any opinions are those of Jennifer Adams and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Expressions of opinion are as of this date and are subject to change without notice. Raymond James Financial Advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.