Going through a divorce is never fun. Not for you, and definitely not for your children (if you have them.) Add the finances to the divorce discussion, and results of a heated, adversarial divorce can be catastrophic – both financially and emotionally. And a truly vitriolic divorce can put your children into therapy for many years to come.
Heading into divorce proceedings can be a big challenge on many different levels. Keep in mind that the goal is to get out of the process as inexpensively as possible, while protecting whatever assets you have to help rebuild for the future.
Emotion and financial decisions
As a professional financial planner and money manager, the one thing I consistently tell people is to avoid making emotional decisions as it relates to money. When this happens, the results are often less than optimal. Going through a divorce is one of the biggest emotional roller coasters you can experience. In order to make rational decisions throughout, you have to control your emotions. It is easier said than done. If you can put your emotions in check, you will find yourself in better financial shape in the long run.
One emotion you must try to avoid is anger because it can make things worse than they truly are. Anger gets in the way of making rational decisions and coming to an agreement. If you can remove anger as an obstacle, you can come to a reasonable conclusion.
If you fight, you’ll spend extra money on legal fees, and the outcome is often not any better for you. Even if you were to ‘win’ on certain points, your kids could suffer emotional harm from the battle. This can lead to psychological trauma that can have long-lasting affects.
Here are some steps to take:
- Recognize that you are in a tough situation, one that nobody wants to be in. That realization will create a mindset of acceptance that can help diffuse your anger, fear and anxiety.
- Make every effort to be as cordial as possible. Start each day with a blank slate so that you can keep more control over your emotions.
- Keep your children in mind. If your ego takes over, you can lose sight of the bigger picture – completing this process with as little financial loss as possible so that you and your kids can continue in life with fewer scars, if any.
Hire a mediator or an attorney
A neutral 3rd party, such as a mediator or an attorney, can help keep you on the right track by focusing on the goals at hand and guiding you to completion. Which should you choose? Many family lawyers are also mediators that help divorcing parties settle through mediation, rather than through the courts.
You’re also best-served by having a financial advisor on your team, another neutral 3rd-party, who can help keep your emotions in check and serve as a voice of reason before you make any decisions.
In over 20 years of assisting divorcing clients, I’ve found that the people who make a commitment to being cordial, and keeping their children foremost in their minds, get through the process the most financially unscathed.
Does not having children make the divorce easier?
I’ve mentioned children a lot here, but what if you don’t have kids? Does that make a divorce any easier? Not necessarily, since there may still be many other money-related issues that require a calm mind and a cordial demeanor for best success.
It can be difficult to keep calm and cordial if you’ve been cheated-on or otherwise severely hurt. What you don’t want to do is try to harm the other person in your divorce proceedings. Fighting and wanting revenge will just result in higher legal fees. The thirst for retribution is all-consuming, causing the divorce to spiral into an all-out war.
So here is a piece of advice that can help prevent you from making one of the biggest mistakes in divorce proceedings: find another way to ‘win.’
In a divorce, you win by getting through the process cordially and without a mindset of revenge. You win by letting go of your hurt, and letting your attorney or mediator and financial advisor guide you through the process to freedom. You may be a competitive person, or your damaged ego may have made you vindictive, but in trying to “win”, you’re ultimately going to lose.
Protecting Assets with a Premarital Agreement
Having a premarital agreement (or prenuptial agreement) would help in a divorce situation. It sets the foundation of financial protection. Many couples who are preparing to marry – and planning to beat that 50% divorce rate – are nervous about bringing up the topic, not wanting to hurt their partner.
If you have assets, it’s important to go into a marriage realistically, even if that’s not a romantic thought. Here is my suggestion: have your neutral 3rd-party financial advisor take the heat. All you have to do is say, “My financial advisor is adamant that we talk to an attorney about a pre-nup.”
Having worked with many divorcing clients, I am happy to be in that role if it helps create a premarital contract that is there to help in the future, if needed. You’ll take the pressure off yourself and avoid making emotional decisions that you may regret later.
One emotion you must try to avoid is anger because it can make things worse than they truly are. Anger gets in the way of making rational decisions and coming to an agreement. If you can remove anger as an obstacle, you can come to a reasonable conclusion.
Keep emotions in check and seek help
The goal is to live happily ever after. Perhaps not in the exact way you imagined when you were picking looking at wedding venues. But in a way which preserves your financial future and sets you and your kids on a more stable path.
Listen to my podcast for more information on getting through a divorce in a way that serves you best.
