Later this month (August 14), it’s National Financial Awareness Day, which is a good time to discuss why it’s so important to know your financial situation before you divorce. (This awareness is so important that the state of Michigan passed a new graduation requirement in June, becoming the 14th state to mandate personal financial education for high schoolers.)
It’s not just understanding the numbers, but also understanding your values around money. People view money differently, and there are some great resources shared at the bottom of this blog.
Everybody has a different experience with money in their childhood that informs how we view our finances as adults.
Do you value the big gift or the gift of time? An experiential gift or material items? Is saving for retirement, even in your 30s, always a priority, or do you want to live more in the moment?
All of these stances come from how we are raised to relate to money!
A lot of divorce clients ask how much they’re likely to get in spousal support or child support, and I can’t answer until we know the details on the marital finances and assets. If you don’t know these going into your divorce, you’d be wise to brush up quickly, because the answers come from concrete knowledge.
Curious as to what your financial situation will look like after divorce? I can’t give you that information if you don’t come to me knowing your assets, at least the basics, and where the accounts are.
We can start with a bank balance or statement. Starting with some information will help lead to understanding and outcomes.
If you don’t have a lot of information, then we will get it. But we can’t develop your case, know the strategy we’re going to need, until we know what you have and understand your values.
If savings and retirement are the highest values, in a settlement you might have to shift desires, and not keep the marital home in order to satisfy your savings and retirement values. That’s just one example. There are many!
It’s very common that one partner is better versed in the finances than the other. And it’s not usually along a gender divide.
When you’re married, it makes sense to have the partner who is more adept with finances handle everything. Plus, hopefully you trust your spouse to handle it for the family.
But when you split, you need to have financial awareness of your situation. And really, while you’re married, even if the other person manages the money, you should still know what’s going on. It is always a team effort – and the team takes the hit when something goes awry.
It is helpful if, while you are married, you and your spouse are able to sit down with a financial advisor or sit down together and look at everything, at least once or twice a year, to determine how things are spent. It’s just good teamwork. And if things do fall apart, well at least you have a basis to draw on. Good for the relationship, and good for the individuals, too.
Resources on Personal Finances recommended by financial professional colleagues:
From Ken Bernard, President of Bernard Wealth Management:
The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindauer and Michael LeBoeuf
The Millionaire Next Door by Thomas J. Stanley and William D. Danko
The Intelligent Investor by Benjamin Graham and Jason Zweig (A bit technical)
Get Good with Money: Ten Simple Steps to Becoming Financially Whole by Tiffany Aliche
Also, https://www.investopedia.com/ is a great online resource.
From Julie Quick, CFP®, BFA®, CDFA™ of Cultivate Financial Wellness:
The Science of Happier Spending by Elizabeth Dunn and Michael Norton
You Need a Budget by Jesse Mecham
From Kelly M. Petrocella, CFP®, CDFA™, CPFA™, Vice President, Investments, Financial Advisor, Raymond James & Associates:
My absolute favorite book is One up on Wall Street by Peter Lynch. It is very dated (written in the 80’s) but the concepts are spot on.
And any book about Warren Buffett; The Snowball – Warren Buffett and the Business of Life is one of the more popular ones.