Financial Advice Women Should Seek Before Divorcing or Separating

Money shouldn't be a deciding factor in whether you end your marriage, but it plays a part in the thought process. Get a grip on your finances before you take any big steps. It’ll put you in the best position possible, no matter what.

Contrary to what movies make us believe, rarely does a woman meet with my firm with the goal of taking every last penny from her spouse. Nor do we ever see women who hide assets, so they don’t have to give a fair share to their soon-to-be-ex.

Nearly one-third of the women who walk through my company’s doors are undecided as to whether they want to stay in their marriage or leave. They come in search of answers on how to become more educated and empowered to make good financial decisions. These women are looking to gain an understanding of how their finances would shape up if they were to move forward with legal separation or divorce. They’re also concerned about how a divorce could impact their loved ones, especially their children.

New York City matrimonial attorney Robyn Mann shares that she finds that her female clients who are working handle their own finances and are fairly well informed about finances. She says that “working women who divorce that are better educated and knowledgeable about their finances still have the same fears as non-working women about their future financial security and ability to live a comfortable lifestyle.”

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With that said, it’s very important that women don’t let worries over their future financial standing be the determining factor as to whether or not they proceed with a divorce. My grandmother stayed in an abusive marriage because she lacked the financial knowledge and confidence to leave my grandfather, but that doesn't have to — and shouldn't — be the case for others.

Thankfully, there are countless ways to prepare for the next phase of your life, and ensure that you’re in a good place, financially and emotionally.

What You Should Know About Your Finances

Before you decide to separate and incur what can often be a high cost of divorce, you should do your best to gain a comprehensive understanding of your household’s finances. Not only will this educate you on what your finances may look like post-divorce, but it can also reveal how much you can afford to spend during the legal process. This will make you feel more prepared to negotiate and can help you walk into the negotiating room with more confidence. Think of your finances like anything else in life — when you’re knowledgeable about a topic, you can walk into any discussion with your head held high, ready to share your perspective. But when you walk into that same room with unanswered questions or a lack of understanding, your confidence takes a hit.

Start by keeping a detailed record of all your current expenses and try to anticipate any future ones. Then look to gather all of what you might consider “financial documentation,” including credit card statements, bank statements, retirement and investment account statements, any ledgers for loans and income tax returns. Yes, that’s a lot, but take things one day at a time, and check items off your list as you’re able to find them.

Why Women Who Are Financially Prepared Are Always Better Off

From what I’ve seen over the years, the women who have the most in-depth understanding of their finances (and thus the most confidence heading into divorce discussions) are the ones who walk away feeling the most positive once the divorce is finalized. It’s not because they secured the biggest payouts or the most assets — it’s because they were empowered to make their own decisions about what was best for their future.

Additionally, one asset that really helps women in the process of divorce is an emergency fund. It’s one of the most important things you can have in your personal finance arsenal. Everyone should have enough cash on hand to extricate themselves from a bad or unexpected situation and get back on their feet. Sadly, most Americans don’t have enough saved to cover even a $1,000 emergency, but in a perfect world, I recommend having enough money to cover your expenses for six months, as well as any unexpected expenses you may have throughout the divorce process.

To best understand your finances, it is ideal to meet with a financial adviser, and it’s OK to come with more questions than answers. Ideally, it would be best to meet with a different financial adviser than the one you used with your ex during the marriage. The relationship with your adviser is a trusted one that you can rely on not just during a divorce.

Don’t feel pressured to have all of your financial numbers down to the penny — the goal is that slowly but surely, you’re gaining a better understanding of what your financial future will look like, with regard to your budget, standard of living and retirement accounts.

Women have the option to go through this process on their own, and for those who feel well-prepared, that can be empowering. However, as a Certified Divorce Financial Analyst myself, I find that many prefer the support of working with a professional who can help them navigate divorce-related money issues such as asset distribution, taxes and financial planning. A CDFA is a financial professional who helps clients navigate divorce-related money issues, such as asset distribution, taxes and financial planning. CDFAs can help model out how a divorce settlement might impact your finances, offering a clear view of your financial future.

How to Prepare fora Meeting with an Adviser

Before you meet with your adviser, I recommend that my clients try to gather the following documents:

  • Investment account statements showing account values, holdings, cost basis and account titles
  • Debt statements showing interest rates and outstanding balances
  • Property deeds
  • Insurance policies, including the declarations pages for life, health, disability and long-term care insurance
  • Property and casualty coverage, including auto, homeowner, renter, umbrella and business insurance
  • Tax returns from the last three years
  • Prenuptial or post-nuptial agreements

If you don’t have access to these documents, don’t fret. You can work with your adviser to sew together the quilt of your financial picture.

When you’re going through a divorce, emotions often run high, and with children and day-to-day life obligations to worry about, your finances may not be a top priority. However, equipping yourself with the knowledge about your specific financial situation can be empowering, allowing you to navigate the process from a place of understanding and start your new chapter.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Stacy Francis, CFP®, CDFA®, CES™
President & CEO, Francis Financial Inc.

Stacy is a nationally recognized financial expert and the President and CEO of Francis Financial Inc. (opens in new tab), which she founded 15 years ago. She is a Certified Financial Planner® (CFP®) and Certified Divorce Financial Analyst® (CDFA®) who provides advice to women going through transitions, such as divorce, widowhood and sudden wealth. She is also the founder of Savvy Ladies™, a nonprofit that has provided free personal finance education and resources to over 15,000 women.