Divorce involves financial decisions. Understanding the financial consequences of divorce can save you time, money and frustration.

A prolonged drop in the price of oil has dampened Alberta’s economic outlook and has resulted in job losses. As Alberta’s economic situation worsens, it is inevitable that many couples living in Calgary will be reexamining their wedding vows.

Losing one’s job and the financial stress that accompanies it is often the tipping point to end a marriage already on the rocks. When couples promise to love each other “for richer or for poor,” many of them do not envision owing more on their mortgage than their house is worth, unemployment, and the evaporation of retirement assets. You don’t have to be an economist to figure out that when the economy goes down, the divorce rate goes up.

Whether the divorce is hotly contested or amicable, it is expensive. It will trash even the most carefully prepared financial plan. For many, divorce is downright devastating – emotionally and financially. If you are facing divorce, consider the following:

Question the divorce:

Disagreements over money are contributing factors in marital unhappiness. However, don’t let something you can’t control, like the economy, destroy your marriage and everything you put into it.

Invest in making your relationship stronger. If your marriage is coming apart, then give your marriage a chance and try counselling. Although some couples are indeed better off parting ways, others give up too easily.

Think the grass is greener elsewhere? Well, just remember all lawns have weeds to pick. Just as a lawn needs to be watered and fertilized, relationships also need to be nurtured so they don’t wither and die. The cornerstone of a healthy relationship is communication. Seek professionals that can help you and your spouse communicate about your differences and struggles. Take the time to connect with your spouse regularly, and tend to the garden of your marriage.

Separate your emotions from the financial issues:

Feelings of revenge may be common in some divorces. This is especially true where trust has been breached because of infidelity and other irreconcilable differences. However, this will only help lawyers pad their pockets as you and your spouse duke it out.

If divorce is inevitable, then do it efficiently and harmoniously. That way you can get on with your lives and have more money to work with. If the divorce is expected to be civil, then consider divorce mediation instead of conventional litigation. It will save you time and money. It will also allow you and your spouse to be in control of the decisions being made.

Know your financial position, and priorities:

All divorce agreements involve a financial settlement. Prepare a list of financial assets and liabilities you and your spouse have. Ensure you have all the details such as investment account records and statements. After you have the whole picture, determine what is important to you financially and what isn’t.

Educate yourself:

If you are not financially savvy, divorce will force you to get a crash course in personal finance when you are not emotionally prepared for it. Learn about personal finance and the divorce process. Start charting your expenses so you know where and how you spend your money. With this knowledge, prepare a realistic post-separation budget. Ensure all financial obligations are considered, and stick to it. Seek professional guidance such as a divorce financial analyst. They can assist you through pre and post divorce financial struggles. They will also ensure that proactive tax strategies are implemented to prevent unpleasant surprises on your next income tax return.

Don’t lose sight of other priorities:

Ending a marriage or common-law relationship can have an impact beyond the couple. In the case of separating and divorcing parents, post-breakup arrangements can alter their children’s routines. Children’s reactions will vary depending on their age and stage of emotional or physical development. Some may experience a lack of understanding and feel confused or anxious. Others may express feelings of sadness, anger or loss. It is crucial that these issues, along with other child specific needs, are considered when developing a parenting plan after the dissolution of a marriage or common-law relationship.

In Canada, about 40% of first marriages are expected to end in divorce. This statistic alone shows how common divorce is today. However, that does not mean you will be prepared for it when you are faced with it. Whether your are considering separation or are already in the process of getting a divorce, you will be making decisions that affect the rest of your life. Understand the financial consequences of divorce to minimize the damage.

At Leap! Divorce Solutions, we offer Financial Coaching and Personal Tax Preparation services. Click HERE to find out more.