How Finances Affect Divorce

On this episode of A Wiser Retirement™ Podcast, Casey Smith, Missie Beach, CFP®, CDFA®, and Michaela Dowdy, discuss how finances affect divorce. They also talk about things couples can do to avoid heading down the road toward divorce.

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SUMMARY:

The Money Gets Married Too

Nowadays, we see a lot of young couples that get married and keep separate bank accounts. This practice offers a great risk to marriage health overall. However, we can see this justified more if it is your second or third marriage later in life. In those cases, each party comes in carrying their own baggage, which could be a large amount of money or a great amount of debt. For those situations, it might be wise to keep accounts separate. However, for couples who get married with the hope to build a life together, combining finances is a way to grow together, and avoid arguments about money.

Opposing Attitude on How to Handle Money

Since marriage is made of two different people who were raised differently, it’s common for a husband and wife to have opposing views on money. This why money is one of the leading causes of divorce. It’s crucial to align expectations in regards to money with your partner at the beginning of the relationship. This will help avoid arguments and conflicts down the road, which could lead to divorce. 

Set Priorities Together

When you don’t have a financial plan in place, there are no set priorities. When priorities are not specified, it is easy to spend on unnecessary things that each party has a different opinion on. Credit cards are definitely a way to make these unnecessary purchases real. This can easily lead to credit card debt accumulation and potential disagreements. We counsel couples to have a joint credit card account where both partners can have access to monthly statements. This way you avoid purchases made without prior communication.

How does your partner feel about debt?

In the same way each person has their own way of dealing with their finances, each person also has a different view on debt. For some, debt is a normal thing, maybe they grew up around it. Some people’s parents had car loans, mortgages, student loans, so that feels normal to them. For others, debt is something they avoid at all costs because that’s what they saw their parents do when growing up. Either way, it is crucial that both partners are on the same page. 

We know that problems with personal finance in a marriage can lead to divorce. Our best advice to couples who are getting married, or have been married for a while but are still trying to figure out their finances is to make it a joint purpose. Just as in other aspects of life, working together towards a common goal will bring you closer. It teaches you humility to understand and accept that the way you get there doesn’t really matter as long as you both reach the top together. 

Download our eBook on “Buyer Beware: Why do they keep trying to sell you that annuity?”

TIMESTAMPS:

0:00 Intro

2:35 The Money Gets Married Too

07:15 Opposing Attitudes on How to Handle Money

12:10 Set Priorities Together

26:25 How does your partner feel about debt?

LINKS:

Learn more about Casey Smith and Missie Beach, CFP®, CDFA®

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Learn more about A Wiser Retirement™ podcast and access previous episodes.

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By Published On: April 24, 2023

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