3 tips to avoid divorce financial ruin this season

Don’t let divorce ruin you financially. Photo by Aussieactive via Unsplash.

Money is often a source of discontent in a marriage, and can lead to divorce. Then after the process, money is still a problem! There are some ways to avoid divorce financial ruin, but they do require some honesty and work on your part.

  1. Get through the holiday season without overspending.
  2. Know the household financial picture: assets, debts, income, expenses.
  3. Be realistic.

“You can’t please everyone. When you’re too focused on living up to other people’s standards, you aren’t spending enough time raising your own.” — Kris Carr

Get through the holiday season without overspending

It’s pretty common for Americans to spend too much on the holidays, putting all the presents and new decorations on the credit card to be paid for later. Obviously overspending is a bad idea, even for those who aren’t divorcing!

If you are in the middle of the divorce process, it’s especially important for you to avoid spending money that you don’t have. If you have to put it on the credit card, and you can’t pay it off this month, you can’t afford it.

Parents going through a divorce often feel guilty about the impact it has on their kids, so they buy too much to make up for it. This is very common, which still doesn’t make it a good idea!

By spending money you don’t have, you might be leading your family down the path to divorce financial ruin.

That’s a lot harder on the kids than not getting the same overpriced toy as their friend down the block.

As a parent, you need to spend time with the kids, not money. If you’re a crafty type, maybe you and the kids can make ornaments or something to give as gifts, or donate to those less fortunate. Remember that helping others brings that feel-good chemical milkshake to the yard (of your brain).

If you’re a more active parent, spend time playing with them, rather than only buying toys for them to play with. Take them sledding if you’re in a snowy part of the US, or go to the park if you’re not.

There are all kinds of activities you can do with your kids that don’t cost much. It’s important for your kids to know you still love them during this process. You may have heard that it’s better to spend money on experiences, not things. Time with your kids is an experience that helps both of you during divorce.

Sometimes during the split, one parent has access to money. They can load up on showy or expensive presents for the kids. The other has more modest means and can’t afford to spend that much.

That doesn’t mean the lower earner loves their kids any less! Going into debt to try to keep up with the Joneses (in this case, your co-parent) isn’t going to be any help now, or in the future. Be prepared for an honest, age-appropriate answer when they ask why you can’t buy the latest toy and the other parent can.

Know the household financial picture: assets, debts, income, expenses

Normally in a marriage one person handles the finances, or one handles investments and the other does the daily money tasks, like grocery shopping and so forth. You may be totally uninterested in finance. But in order to avoid financial ruin after your divorce, you need to know the basics.

It’s especially important that you know what debts are owed on what assets. The spouse who doesn’t pay attention to the finances takes an asset in the settlement. Later they discover that there’s a large debt owed on it, that they are now responsible for paying off. Don’t let that happen to you.

Of course you can hire a professional to help you with the finances. They can analyze whether a proposed settlement will be OK for you by running projections out into the future. But whether you hire someone or not, you still need to understand what’s going on in your household.

Be realistic

This may be the most important principle of the three! You need to know your household financial picture in order to be realistic.

Suppose there’s only one income of $100,000. You won’t be able to live a $100,000 lifestyle after the divorce now that there are two households. At most you’ll have a $50,000 lifestyle, and maybe a bit less, since it does cost more to live separately.

If you really don’t think you can live a $50,000 lifestyle, then you may need a job to increase your income. You might need to get some training first or more school before you can get a good job. It’s possible you could be in that $50,000 lifestyle for a while, so be realistic about your job prospects.

Can you afford to keep the house? Depending on your situation, it may work out that the custodial parent can stay in the house until the kids are off to college. But it might not. In order to avoid divorce financial ruin, you might have to sell it and divide the proceeds.

Staying in the house until you’re forced to leave doesn’t help anyone. Make a realistic decision based on your finances, not on your emotions about the house (or your marriage.)

Being realistic about your expectations in divorce can also help prevent the process from being too drawn out or expensive.

Should you spend $60,000 on lawyer’s fees because the two of you can’t agree who should get the $600 armoire? (Yes, this has happened. And no, you shouldn’t!) Recognize when the value of the asset is far less than what you’d spend fighting over it.


Don’t let the holiday season drive you into overspending! Know your current household financial picture so you can then be realistic about your expectations going forward.

You might not have to deal with the prospect of financial ruin if you understand the money basics. You can communicate the reality to your kids so they understand what is and is not possible this year.

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