Three Common Financial Mistakes in Divorce

Divorce can be financially challenging, and making the wrong moves can have long-term consequences. Here are the top three financial mistakes people often make during a divorce:

1. Underestimating Expenses & Lifestyle Costs

Many people fail to create a post-divorce budget and underestimate how much it will cost to maintain their lifestyle on a single income. This can lead to financial struggles, especially when adjusting to new living arrangements, child support, or spousal maintenance obligations.

Tip: Make a detailed budget before finalizing the divorce to ensure you can afford your new lifestyle.

2. Fighting Over the House Without Considering Affordability

The family home is often a point of contention, but keeping it without understanding the financial burden can be a mistake. Many people overlook property taxes, maintenance, and mortgage payments, only to realize later that they can’t afford it on their own.

Tip: Consider all the options. Downsizing might ensure that you have enough income to sustain homeownership.

3. Not Understanding the Division of Assets & Debts

Some assets (like retirement accounts) have tax implications, and debts accrued during the marriage may be split between both spouses, even if one person was responsible for them. Not understanding how assets and liabilities are divided can lead to financial setbacks.

Tip: Work with a Certified Divorce Financial Analyst (CDFA®) or divorce attorney to ensure a fair and informed division of assets and debts.

If you have any questions on how to get started, please contact us for an initial consultation.  A little clarity with the finances can make these difficult decisions a lot easier.