9 Brutal Ways Divorce can Destroy Your Finances (and How to Prevent It)

MANAGE MONEY - BUDGETING
Divorce can be just as difficult for your wallet as it is for your mental health.
Updated April 3, 2023
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Divorce is one of the most stressful events that can happen in a person's life. It isn't just emotionally draining, either, as it can also be catastrophic for your bank account. Whether it’s lost wages, added housing costs, or expensive legal representation, here’s how divorce can ruin your finances along with tips for how to cope.

Your income may decrease

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Depending on your employment status, divorce may decrease your income for several reasons. For one, when you and your partner divorce, you’re no longer supported by their income. That means you’ll be relying solely on yourself for support.

Additionally, if you have children, you may have to decrease your work hours to pick up the kids if your spouse used to watch them — and lost hours means lost wages.

Tip: A budget or a side hustle can come in handy to bridge the money gaps and help you manage your money better.

Your childcare costs may increase

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When you and your partner are under one roof, you likely can manage your childcare costs together. In fact, one parent may be able to work less (or not at all) and avoid the cost of outside childcare altogether.

However, once you divorce, you might have to find childcare, and everyone knows how expensive it is (childcare is $8,000 per year on average according to the non-profit news organization Marketplace).

Tip: A sympathetic family member or a friend with similar childcare challenges may be able to help lighten the loan. Don’t be afraid to ask for the help you need.

Your housing costs may double

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Living single is more expensive than living with a roommate or partner. You only have one income to cover the mortgage or rent, plus all of the bills, as opposed to two. That’s why getting a divorce can double your housing costs, as you’re no longer under the same roof.

Whether you’re the partner remaining at home with the mortgage or the person renting an apartment, more of your money is inevitably going towards housing.

Tip: Consider getting a roommate you trust to offset the new costs or even moving in with understanding friends or family (temporarily).

Your health insurance may be pricier

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Securing good health insurance is difficult enough, whether you receive it from your employer or sign up for it at the Health Insurance Marketplace on Healthcare.gov. That’s why it’s always nice when your or your spouse’s employer picks up a chunk of the cost. However, if you are covered under your spouse’s plan, then divorcing may drastically increase what you pay for health insurance.

To cope, see if you can secure a new plan through your job, or check Healthcare.gov for potentially affordable deals. Be sure to enter your financial information on Healthcare.gov to see if you qualify for tax credits that lower your insurance costs.

Tip: Whether you’re seeking coverage through work or through the Health Insurance Marketplace, you’re entitled to a special enrollment period when you experience a life change like divorce.

Your retirement savings could take a hit

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When you tied the knot, chances are you sat down and mapped out your financial life as a team. If so, you likely planned for a retired life together and strategically structured your 401(k)s in a way that worked for both of you.


However, getting a divorce means you’re no longer getting that RV and exploring the country as a pair. If you have the retirement savings, your spouse may be entitled to a portion of them, and vice versa.

Tip: Consider meeting with a Certified Divorce Financial Analyst or another financial planner as early in the divorce process as possible to get a sense of the impact your divorce will have on your retirement and on your finances overall.

You may have to pay your spouse’s debt

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Many married couples have joint credit card accounts. There are reasons for this, such as helping one partner improve their credit. But if you’re getting a divorce and your partner has racked up a hefty pile of credit card debt on your joint account, you may be on the hook. That can have a devastating impact on your credit score, especially if your ex decides not to pay that debt off.

Tip: If you’re feeling overwhelmed by debt after your divorce, consider working with a credit counselor. They can help you develop a budget and negotiate an affordable payment plan with your creditors. 

You may have to pay child support

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Few people would disagree that divorce is more complicated when there are children involved. This is true for a variety of reasons, and one of them includes having to pay child support. If you don’t have full custody of the children, then you may be ordered by the court to pay. While this might seem expensive, keep the reason for the support in mind.

Tip: Don’t hesitate to ask for modifications to your support amount if you experience changes in your situation. If you’re laid off or experience an illness that prevents you from working, you may be able to request an adjustment to the amount you pay in child support.

You may have to pay alimony

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When you and your spouse live together, it’s not uncommon to share everything, from the income that you earn to the expenses that you incur. Once you split up, there’s a chance you may have to make alimony payments (also known as spousal support). This is sometimes the case if you’ve been married a long time and you and your partner had significantly different incomes.

For example, if you worked outside the home and your partner didn’t, you may be required to support your former spouse financially. Depending on both your financial situation and the size of the payments, these payments could be substantial.

Tip: Budgeting is key with expenses like alimony. Budgeting apps can help you keep on top of new or changing expenses.

Legal fees could add up

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Divorce lawyers are necessary for many people to ensure they’re treated fairly through the process. If you can safely find a way to part on amicable terms without lawyers, you and your ex will save significantly. If the divorce isn’t amicable, or if you have a complicated financial situation or custody issues, a good attorney is essential.

Tip: If affording a lawyer is a concern, consider contacting your local legal aid office for assistance.

Bottom line

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Divorce isn’t easy, even if both parties agree it’s the right thing for everyone involved. And it can have a significant impact on your finances. Plan ahead when you can, look for ways to increase your income, and seek support from trusted family, friends, or in-person or online support groups. You don’t have to go through this alone.

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Author Details

Cat Lafuente Cat Lafuente is a Florida-based writer and editor with extensive experience in digital and print content spaces. Her own personal finance journey — particularly consolidating debt and paying it off, in turn boosting her credit score and becoming a homeowner — inspired her to join the FinanceBuzz team; she hopes she can help others do the same.

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