What every woman should know about money after divorce
The first 30 days are crucial.
By Sally Matthews, Client Manager at Paradigm Norton
Divorce can be one of life’s most monumental challenges, leading to emotional upheaval, and for many, the destabilisation of a foundation that had been built with “forever” in mind.
But for women, the challenges can be unusually pronounced when it comes to finances.
While approximately 70% of divorces are initiated by women, women most often take the brunt of its consequences, certainly in the UK, with their average income dropping by 41% post-divorce (compared to 21% for men).
It’s important to note that most post-divorce research has centred on heterosexual couples, particularly the financial outcomes for men and women. However, issues like asset division and lifestyle changes affect people across all types of relationships.
Why the financial fallout of divorce hits women hardest
Research reveals that one in four women struggle financially after their split, compared to just 16% of men. But why?
According to Legal & General, women in the UK are:
Twice as likely as men to reduce their working hours after divorce, primarily due to childcare responsibilities.
Significantly more inclined to forgo claims to their partner’s pension in settlement agreements (28% compared to 17%).
More often financially dependent on their spouses, with 51% of heterosexual divorces involving women who relied on their husbands for financial support during the marriage.
Thanks to persistent gender norms, earning power disparities, and reduced access to financial information and resources, women often stumble disproportionately into negative financial outcomes, commonly referred to as the “Divorce Gap”.
Here’s how you can prepare for the best financial outcome if you’re getting divorced.
1. Ask the tough questions
Money can be an uncomfortable conversation at the best of times, but when facing a divorce it’s essential to speak up.
The division of labour in relationships is key, and you have every right to knowledge about your household finances.
If you have taken a backseat from a career to raise children, and become more reliant on your partner’s income, you might not feel you can question what they are earning and cash inflows and outflows. But you absolutely do have a right to awareness of what’s coming in and what’s going out, such as your partner’s pension arrangements through work and other financial incentives such as bonuses, share option schemes, share incentive plans or other accounts you might be entitled to.
Start with understanding: what does it cost to run your life? What are your expenses? What do you need to maintain your lifestyle?
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2. Leave no stone unturned
To find out the answers to those questions above, divorce proceedings should start with the advice of a lawyer, who can set the scene and prepare you for the reality of divorce. They can provide a perspective that cuts through emotional fog, to shine a light on options and assets that might otherwise be hidden from view.
To start, most lawyers will point you in the direction of mediation services, which could be a lower-cost option, while being just as effective in coming to an agreement.
In the UK, that same lawyer will also encourage both parties to complete a Form E, to lay bare all income, assets and living costs. You might wonder if this is necessarily or could cause tensions, but doing it properly is critical. Without full visibility, you risk missing hidden assets or undervaluing what's there.
If things get acrimonious, a lawyer can also help you know your rights.
Leave no stone unturned, and make sure you come at the situation with curiosity and an open mind. Even if you’re emotionally attached to something, like the family home, you need to explore all options, even those that don’t feel palatable to you. By looking at all possible scenarios, you’re most likely to reach the best possible outcome.
With this in mind, if you can afford it you can also consider a financial planner who could provide financial clarity into the future, and potentially avoid court time in the process.
3. Don’t forget existing life assurance arrangements
One frequent mistake is overlooking non-obvious financial elements, such as life assurance benefits. The focus can quickly be dominated by the house or the pension pot, but many can forget about what happens in the event an ex-partner dies or becomes seriously unwell.
If they’re providing maintenance for the wife and children, and they die, or are no longer able to work, those payments stop, and you’re stuck. Unless an agreement is in place for any existing or new life assurance, you can be left very exposed and financially vulnerable.
4. Prepare for the first 30 days
Of course, a financial planner and lawyer are not available to everyone.
So, what should all women, regardless of circumstances, do in the first 30 days of divorce?
Track your monthly and annual expenses, including one-off costs like car repairs or home maintenance. Build a running spreadsheet so you can see your spending clearly.
Check if your employer offers workplace benefits - employee assistance programs, counselling, or financial health check sessions. There might be support already available.
Ask if you can access a financial coach or planner for a one-off session. Even without signing up for long-term support, you can still walk away with valuable guidance.
5. Rebuild your financial security
Once the dust of a divorce has settled, a new chapter awaits. And, while for many that feels daunting, there’s an opportunity to tackle this chapter with a renewed sense of adventure. While grief has its place, so too does the act of writing this next phase in life.
Spending patterns change when you're on your own. Take ownership of your immediate and long term financial security. Educate yourself. Read, ask questions, and reach out to those with financial literacy.
By asking for help, women post-divorce not only achieve better outcomes, but also share the load of what can be an otherwise lonely experience.
6. Do more than survive: thrive
Divorce can be painful, which is why it can be so hard for those in its midst to see that it can be a new beginning. Time passes, circumstances change, and one day - as hard as it can be to believe - it simply becomes part of a far bigger story.
Don’t make the same mistakes twice. If you didn’t have open conversations about money with your former partner, don’t let that pattern continue in your next relationship.
You need to be aligned on your values. A second big relationship is often more complex, especially if you have children. It might feel taboo or even triggering, but you shouldn’t shy away from speaking about these important issues.
Disclaimer: This article is for informational purposes only and is not intended to be personal financial or legal advice.
Paradigm Norton Financial Planning Ltd is authorised and regulated by the UK’s Financial Conduct Authority. FCA register number is 455083.