Three money tips when getting divorced

Getting divorced can have a big impact on your life.

While we don’t plan to get divorced, it’s more common than you might think. A third of people married in 1999 have split up – it’s around one in five for those married in 2009.

And women take the bigger financial hit – with income falling by 33% compared to 18% for men. And women are more likely to face financial struggle post-divorce.

My grandma got divorced in her 30s. She lived with the financial impact for almost 50 years.

Here are some things you can do during a divorce to help you rebuild your finances and come back stronger.

This article isn’t personal advice. If you’re not sure whether something is right for you, you should ask for financial advice. An adviser will be able to help you understand what’s suitable for your individual circumstances.

1. Agree what you can between you

The more you can agree amicably, the less you need to involve lawyers. That means you’ll both be able to walk away in a better position.

You could use mediation, if you've got a reasonable relationship but would prefer a lawyer present. This brings you together in a room with a single lawyer to find an arrangement you’re both happy with.

But you’ll both need to work together. And be willing to compromise. The cost of a divorce can range from £240 to £1,500 for uncontested cases. But it could rise to £10,000 or more for cases that go to court. Just make sure you’re aware of how the costs stack up so you can factor it into your financial plans.

If you feel you need a bit more professional support, you can try collaboration. Here, you won’t have a single mediator. You'll have your own lawyers and other experts you feel you need – like financial advisers or accountants. This helps make sure agreements are fair, without the cost of going to court.

2. Remember your pensions

Although they can help you divide your assets, they can’t advise you on how to rebuild your finances.

It’s normal to focus on the big things, when a marriage ends. Where are you going to live? How will it change the family dynamic? And what are you going to live on?

But there's a common and sometimes expensive mistake women make during a divorce. It's overlooking the pensions you each have.

In some cases, pensions are worth more than the family home.

Even when they appreciate its value, lots of women will use offsetting. This is trading any right to the pension in return for equity in the home. There are lots of reasons why you'd prefer this option, especially if your children live with you. But you need to understand the position this leaves you in when you retire.

There are other options, including pension sharing. They’re not always straightforward, so don't rush your decision or get some advice first.

3. Don’t mistake your lawyer for a financial adviser

Lawyers aren’t financial advisers.

Although they can help you divide your assets, they can’t advise you on how to rebuild your finances.

Whatever agreement you end up with, you’ll have split the assets and income. Those used to fund one household, now it'll need to support two. There’s a chance you could be living off less than you expected.

Once the divorce is over, take stock.

Knowing your options and planning is key. It will give you a better chance of rebuilding your financial future and coming back stronger.

Look at everything. From your income and budgeting to rebuilding your emergency savings and pension.

And don’t overlook your will or insurance. If you get spousal maintenance, you might want to insure your ex’s life. This could make sure payments will continue if anything were to happen to them.

You can do this yourself. But you might find a financial adviser can really add support.

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