With an estimated 50 percent of marriages ending in divorce, and Oklahoma consistently ranking in the top five nationally, the prevalence of divorce has many people alarmed. Its emotional toll is well-known, but its financial implications can be just as complicated and devastating.
“Couples are going to need to support two households for a while ” instead of one ” with the same amount of cash,” said Patricia Goodman, a certified divorce financial planner and founder of Edmond’s Partners in Financial Planning.
One of the biggest mistakes divorcing couples make is failing to consider their next step, Goodman said. They become “locked in the here and now, afraid of what’s going to happen them.”
“That fear is what stifles them into making decisions for the wrong reasons,” she said. “And that fear leads them to greed, and it leads them to anger, and it leads them just down the path of the unknown, and if they would stop and plan their next chapter and how they’re going to accomplish that, it would probably alleviate a lot of the anxiety.”
Divorce financial planning is an emerging field, Goodman said. She became involved after several attorneys referred divorce clients to her, and she found that many of their divorce decrees didn’t make sense.
“I found a lot of property settlements, a lot of alimony settlements and things like that, that just didn’t make financial sense, and that’s why I got involved during the divorce,” she said.
She also found many cases where only one partner, usually the primary earner, really understood the couple’s finances.
“There is an imbalance of power when it comes to separating,” Goodman said.
Women in particular may feel hesitant to leave a marriage, she said, or feel pressured to marry again soon after a divorce because of financial fears.
“Her job has been to be the mother and the manager of the household. I think fear of how to get out of that is probably one of the biggest obstacles for her,” Goodman said.
Edmond resident Paula Gillespie, one of Goodman’s clients, discovered these financial challenges when she recently divorced. A divorce attorney in Texas, she had expected her attorneys to handle the financial aspect, and when they didn’t, she was left to sift through the paperwork alone. She realized she didn’t have a clear picture of the couple’s financial situation.
“You just get lazy and stop paying attention. And then if you get a divorce, you realize you don’t know what you have, you don’t know what your debts are. You know nothing,” Gillespie said.
It’s essential that the non-working partner take a more active interest in the couple’s finances throughout the marriage, she said.
“You should know what all your investments are, what the income is,” Gillespie said. “I had always been very financially independent, I knew what everything was, and in 18 years became very financially dependent.”
For her, hiring a financial planner made the divorce process easier because the judge used Goodman’s report to make a decision.
“It keeps you from having a long, drawn-out divorce proceeding,” she said.
According to Goodman, divorcing couples need to negotiate their finances as though they were negotiating the separation of a business.
“You’ve got to come to the negotiating table with your business hat, and leave your emotions behind,” she said.
The emotional nature of a divorce can cause couples to make poor decisions, reacting instead of being proactive, and can lead to “a game of takeaway, and it’s a game of hurt and pain for the entire family,” Goodman said.
Adding to the emotional strain is the fact that, in the current economy, some couples simply can’t afford to get divorced. Until they can, they must often live together as roommates.
“Property values are down on homes that would otherwise be put on the market to sell. Jobs are uncertain at this point, and I think cost sharing is common for a lot of couples who would prefer to be divorced today but have to put that off,” she said.
Financial problems affect both the marriage and the end of the marriage by causing stress in the relationship and preventing the couple from ending the partnership, Goodman said.
“I think it’s important to expand on the financial difficulties, how that can lead to stress in a marriage, but it can also prevent the affordability of going through the divorce,” she said. “I think that’s almost a trap, with the economy that we’re in right now, that families are facing.” “Lea Terry