Fifty-nine percent of divorcees surveyed say that finances played at least “somewhat” of a role in their divorces (20 percent believe it played a “big” role). Also, 36 percent say their spouse’s credit score was a source of stress in the marriage. Those surveyed regret not learning more about their future spouse’s financial habits, prior to walking down the aisle. A majority of both women and men — 71 percent and 60 percent, respectively —said their former spouse’s spending habits were different than what they anticipated before they married.
“It’s important for couples to discuss finances before saying ‘I do,’ and to communicate frequently. Couples should also make sure they agree when it comes to financial practices such as budgeting and how to utilize credit throughout the marriage,” says Rod Griffin, director of Public Education. “Individually, each partner should make sure to be engaged with the household finances so they can protect themselves and their assets if the relationship ends.”
Couples’ finances are often negatively impacted by divorce, with the average financial loss reaching nearly $20,000 (in cash and assets). Furthermore, 44 percent of survey respondents say their former spouse ruined their credit. As a result, for many respondents (39 percent), the financial loss of a divorce has them going so far as to say they’ll never marry again. Those that may consider tying the knot again at a later date say good credit is an important quality for a potential spouse (73 percent).
Tips for managing the financial fallout post-divorce
Emma Johnson from Wealthy Single Mommy:
“Separate your finances from your soon-to-be ex-spouse ASAP. This is a time when you need more credit than ever, to rent or buy a new home, get a new car, set up utilities, and finance divorce lawyers. Identity theft is incredibly common during a breakup, as is plummeting credit scores due to confusion and conflict over who is responsible for which accounts. Protect yourself - it is very common for divorcing partners to rack up debt on accounts with both parties names attached.”
Diana Shepherd from Divorce Magazine:
“Creating a budget will eliminate the guesswork about what you can and can’t afford both during and after your divorce. You need to determine what your current living expenses are and how you’ll pay for them; potential sources of income include your own earnings and spousal and/or child support. In addition to regular living expenses, you need to budget for professional help from a divorce lawyer, mediator, financial professional, etc. If your income from all sources won’t be enough to cover your living expenses and divorce-related costs, you need to take a hard look at your expenses and see where you can trim them.”
Mandy Walker from Since My Divorce:
“Get your credit report. This is the best way of knowing what credit accounts are open in your name and whether they are held by just yourself or jointly with another person. Use the report to help you complete the financial disclosures required as part of the legal process. It’s critical that these disclosures be as accurate as possible. You can also use the report to guide you through discussions with your soon to be ex about how any debit balances will be handled and whether the account will be closed or kept open.”
Before finding the perfect mate, make sure as an individual you have a good relationship with your finances. Take our interactive quiz to find out if you and your money are in wedded bliss or headed towards financial frustration.
For more information on budgeting, as well as how debt can affect credit scores, visit the Experian Credit Education blog. Consider enrolling in a credit monitoring service such as Experian CreditWorksSM, which can help you better track and manage your credit report and credit score.
About the survey
The online survey was conducted by Edelman Intelligence on Experian’s behalf from Nov. 2 to 15, 2016, among 500 adults who have gotten divorced within the past five years, are 18 years of age or older, and reside in the United States. This online survey is not based on a probability sample; therefore, no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact firstname.lastname@example.org.
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