Why divorce/breakup is so difficult on a financial life

Some of my posts are (meant to be) inspirational, some are (meant) to make you laugh, while others are (meant) to show you an aspect of the financial world that you have never considered. Today we will dive into the latter. I want you to know what divorce looks like from a financial perspective. Why would I do this? Because I have to see it everyday, and I want you to see it through my eyes. Think of it like the person that says “This tastes like crap! Taste this.” So here is the cost of a split.

How much does it cost to run your household? And you thought running one household was expensive. As it stands pre-divorce, both of your incomes (no matter what they are) go into one pot to pay all the bills. So what happens when that income is forced to fund two households? All hell breaks loose. Let’s take a look at what that looks like:

Pre-divorce hypothetical net monthly household income: $5,000
  • Mortgage $1,250
  • Transportation $750
  • Utilities $500
  • Debt payment $600
  • Food $750
  • Everything else $1,150

Post-separation hypothetical net monthly household income : $5,000

  •  Mortgage $1,250
  • Rent $800
  • Transportation $800 (potential insurance price changes)
  • Utilities for home $500
  • Utilities for apartment $200
  • Debt payment $600
  • Food $900 (this almost always increases across the two “new” households)
  • Health insurance (one person usually loses coverage) $300-$1,000
  • Everything else $1,150
Net difference $1,600-$2,300

You don’t have to be a math genius to see that two households costs nearly 25% more than one household. I’m not suggesting that this should/will prevent your divorce, I’m just suggesting that you know what will happen to you financially when the two households split. But wait, there’s more.

Who gets the house? Rarely do two people in a household make the same amount of money. This causes major problems when you consider the next two common normalities. Women, on average, make less than men (don’t blame me. It’s just statistically true). And here is the stunner: women tend to try to “get the house” in a divorce. This means that the lesser income earner is funding the largest expense. This is a disaster. Yes, there are stability considerations especially when children are involved, but I find that divorcees fights way to hard to keep the houses that they can’t possibly afford. A fresh financial start is possible if you don’t “fight for” the house.

Health insurance is still important.  Just because you aren’t married anymore doesn’t meant that you don’t need health insurance. And since one person typically provides the coverage through his/her employer, the other person gets the health insurance shaft in a divorce. This is a problem. It’s a HUGE problem if the person without coverage has health issues.

Kids get extra expensive in relation to two households. The reality is that you will still want to buy your children gifts, clothes, toys, etc. That’s what parents do. However, you have less money to do this. Both parents generally still make these expenditures. That costs more in totality

My point in all of this is that you need to know what your financial life is going to look like if you are considering a divorce. Believe it or not, good or bad, this has prevented many people from getting divorced. If you do get divorced, then you need a plan. Let me know if you have any questions.

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