Money & Divorce: Steps to Managing Your Emotions and Money During a Divorce

By Nikiya Spence, LCSW, CMC
Psychotherapist and Certified Money Coach

Ending a marriage can be one of the most emotionally challenging things that one can do. That’s why many will argue that going through a divorce is almost as difficult if not worse than losing a loved one to death. Grieving normally sets in pretty fast for many. Having to deal with anger, anxiety, sadness, fear, and despair are some of the most common emotions that come up. So who has the time and energy to really focus on money during this time?

Unfortunately, ending a marriage requires that you pay close attention to your finances and make some critical moves to ensure that your future is protected. Money has been shown to be the number one cause of divorce. Therefore, one can imagine the complexity of having couples sort through and communicate about how they are going to divide and handle their finances in the midst of an emotional storm.

If you are going through a divorce or even simply considering going through a divorce, there are some initial steps that you should take immediately. They are as follows:

1. Close all of your joint accounts. This is always the first step you would want to take even if you are simply going through a legal separation. People don’t always think rationally when they are dealing with the stress of a conflicted relationship. The primary purpose of closing all joint accounts is to avoid acquiring additional debt or losing shared bank assets.

2. Pull your credit reports. It is imperative that you pull and review your credit reports from all three major credit reporting agencies (Equifax, TransUnion, and Experian). Reviewing your credit reports will give you a clearer picture as to how you stand financially. You will want to explore what types of debts you are responsible for, what balances you owe, and explore if there are any joint accounts that you are responsible for. Be sure to dispute any accounts that you don’t recognize.

3. Change your beneficiaries. This is a step that is often overlooked. A divorce decree will not control what your ex spouse will or will not get should you have an untimely death. It is essential to remember to change the names of your beneficiaries on all of your accounts or forms that are applicable. Examples of such accounts include but are not limited to retirement accounts, trusts, life insurance policies, and wills.

4. Reevaluate your finances. Reevaluate to determine realistic changes you will have to make to your lifestyle to live comfortably. Create a realistic budget around what you can afford and consider all possible options. Don’t hesitate to meet with a financial specialist that specializes in this area if needed.

5. Consider your health care coverage options. Unfortunately, going through a divorce might also mean losing your health coverage if your spouse is the primary carrier of insurance. Explore all of your options including the option of pursuing coverage under the COBRA program.

6. Considering meeting with a financial therapist that specializes in helping people sort through the emotional side to money. If you are feeling stuck in your emotions due to your pending divorce; it won’t hurt to seek out professional help from someone that specializes in working with these issues. Ruth Hayden, financial educator and author of “For Richer, Not Poorer: The Money Book for Couples” stated “At least 80% of money is about self-management, about emotions, and 20% is about quantifying and computing. The counting part is easy; it’s the emotional part that’s hard”.

Needless to say, going through a divorce can be physically, mentally, and emotionally draining. It is important to recognize your own personal challenges. It is also imperative that you seek the support of professionals, friends, and family members during this time. There are a few things that have to be dealt with early on, such as your finances. The good news is that there are healthy steps that can be taken to ensure that you protect yourself during this time.