By: Leonie O'Connell
In sickness and in health, till death do us part… these kinds of vows are all too easy to break. A marriage may be forever on the day of the union, but the reality is that not all marriages make it to the end. When a marriage heads towards divorce, it’s likely you won’t just leave with a broken heart but a broken budget as well.
Of course, in a perfect world, we all get married to stick it out for the long haul. But divorce is an ever-present spectre in the marital journey. The latest Statistics South Africa data shows us that our divorce rate is on the rise, so it doesn’t make sense to blindly predict that your marriage will make it to the end. You need to be financially prepared for the fiscal realities of a potential divorce.
While an uncontested divorce can cost in the region of R5 000 - R10 000, a contested divorce costs can skyrocket beyond R50 000. That’s a lot of money, but when you’re in the middle of a divorce, you’ll likely do all you can to ensure a speedier resolution.
Divorce is never easy. It's a journey that tests the very core of your emotional and financial strength. As you navigate the turbulent waters, the heartbreak can feel all-consuming. Yet, amidst this emotional upheaval, the stark reality of financial strain looms large, adding another layer of stress to an already challenging situation.
Yes, it’s an emotional rollercoaster, but divorce can have significant financial consequences, potentially affecting savings, retirement plans, and overall financial stability. Understanding these impacts is the first step in protecting your financial future. Divorce can deplete your savings and disrupt long-term financial plans, making it essential to be aware of the potential costs and to plan accordingly.
As it is with all financial wellness issues, awareness is the first step.
Financial Impact Awareness
One of the most critical steps in navigating divorce is being aware of its financial implications. Divorce can lead to a substantial reduction in household income, increased living expenses, and legal fees, all of which can significantly impact your savings and financial health.
The division of assets, including retirement funds and property, can further complicate financial stability. Recognising these challenges early can help you take proactive steps to mitigate their impact.
And with awareness, comes a plan.
Importance of Planning
Proactive financial planning is crucial during a divorce. This is how you protect your financial future and ensure your savings are not depleted. It involves creating a detailed financial plan that considers your current assets, liabilities, and future financial needs.
Planning helps manage the division of assets and prepares you for post-divorce financial independence. It is essential to review and adjust your financial goals and strategies to reflect your new circumstances and to ensure long-term financial security.
But we can’t all know what we don’t know, so a solid plan needs to be fuelled by the right advice.
Professional Guidance
Money is complicated, especially when it comes to the intertwining finances of a married couple. Seeking the advice of a credible and trustworthy financial adviser can help you navigate the complexities of divorce settlements, asset division, and long-term financial strategies. And do it in a way that works for your life and relationship.
With the right financial adviser by your side, you will be able to make informed decisions to safeguard your financial wellbeing. On top of this, advisers are fully equipped to provide valuable insights into the tax implications of divorce, the division of retirement assets, and strategies to rebuild your financial health post-divorce.
An end to your marriage doesn’t have to end your life
Understanding the financial implications of divorce is not just about protecting your savings; it's about preserving your future. It's about ensuring you continue to live with dignity and independence after the dust has settled. This journey isn't just a cold, clinical process of dividing assets and tallying expenses. It's a deeply personal and often painful realisation that life, as you knew it, is changing. But within this change lies the power to take control of your financial destiny.
Proactive planning isn't merely a step – it's a lifeline. It provides clarity amidst the chaos, offering a roadmap to navigate the complexities of asset division and future financial independence. This planning is more than numbers on a spreadsheet; it's a promise to yourself that you will emerge from this stronger and more resilient.
* O'Connell is an advisor at Momentum.
PERSONAL FINANCE