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Troy Saddler
Professor Strickland
English 1010-Sec 412
July 31, 2014

Financial Effects of Divorce
Divorce unfortunately is becoming a common place in our lives. It is estimated that at least half
of the marriages today will end in divorce. One side of divorce that we dont always think about until its
too late is the financial side. Divorce financially affects husbands, wives, and the community. By being
informed and educated on financial matters of divorce individuals can be better prepared for what lies
ahead of them. Being divorced, I have witnessed and lived through some of the effects.
It is said When it comes to building wealth or avoiding poverty, a stable marriage may be your
most important asset. (USU, 109) When a divorce happens you have an income that once supported
one household that is now trying to support two. Researchers estimate divorcing individuals would
need more than a thirty percent increase in income, on average, to maintain the same standard of
living. (USU, 109)
Some women who are divorced have a difficult time trying to manage their finances. If they are
the custodial parent they have a tremendous responsibility not only to be there emotionally and
physically for the children, but also to be able to manage the money for the family. In many situations
the mother may fall into poverty.
In the report from the U.S. Census Bureau Custodial Mothers and Father and Their Child
Support: 2011, It gives some interesting statistics regarding percentages of child support received, and
percentage of legal written agreements among parents. The limitations of these statistics are some
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states cover child support until 21 years and some to 18 years. This report is based off of children up to
21 years. Also it is based off of what is reported by those surveyed. Therefore it is accurate dependent
on the accuracy of those surveyed. The report includes not only divorce situations, but those who have
never married. I still feel that it gives us a good picture of the financial situation of custodial parents.
Approximately 31.8 percent of custodial mothers fall in the poverty level, compared to 16.2 percent of
custodial fathers. The highest poverty rates were custodial mothers who had less than a high school
degree. In families where the mother had a full time job or who had at least a bachelors degree the
poverty rate dropped to about 10%. (Grall, 4)
Teachman talks of the financial impact of Divorce and the difficulties mothers have in the
workplace. He states,
Because many women are new labor force entrants or are returning to work after being absent
for some time, it is difficult for them to find jobs that pay enough to support a family. Many of
these women must take shift work to find employment or to be home with their children at
least part of the timeMothers are nearly twice as likely as married mothers to work non-day
shifts, often in jobs that are unpleasant and pay the minimum wage. When combined with the
costs and constraints of child care and discrimination against single parents in the workplace,
low-paying, dead-end jobs force many working single mothers out of the labor market. The
availability of welfare benefits, especially those that erode with earned income, acts to reduce
the likelihood that divorced mothers will remain active in the labor force. (Teachman)
When mothers with children are working they often have to find childcare while they are at
work. The expense of childcare is usually a shared responsibility between custodial and noncustodial
parent, especially in a divorce situation with a legal agreement, but it is an added expense. The cost of
childcare can often take a large portion of the income coming in.
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Only half of custodial parents had a court order for financial support. The four top reasons
custodial parents gave for not having a legal agreement were, other parent provides what he/she can,
other parent could not afford to pay, did not feel need to make legal, and did not want other parent to
pay. Custodial parents were more likely to receive full child support if there was a joint physical or legal
custody agreement, had a bachelors degree or higher, and the child had contact with other parent.
(Grall, 8)
Eighty one percent of custodial parents are the mothers. It is estimated that 43.4% of custodial
parents received full child support payments in 2011. (Grall, 1) One in three women who own their
home and have children at home at the time of divorce will end up losing their home, and one in five
divorced women fall under the poverty level. The process of getting divorced can be expensive, and
many women are not financially prepared to be single parents. Each individual financial situation varies.
Often you have unequal wages between husband and wife. How well a woman can do financially after
divorce may depend on how much the wife contributed to the finances prior to divorce, and if she is
able to receive child support payments from her husband. The first year following divorce may be the
most financially difficult, and many womens financial situations dont improve until they remarry. (USU,
110)
Some people seem to believe that men are financially better off after a divorce than they were
during their marriage. Good research shows that this is a myth. Most fathers who are going through a
divorced feel the financial squeeze as well. In households where men provide less than eighty percent of
the household income typically suffer more financially from divorce. In this day and age many
households fall under this category. Those who provide at least eighty percent of the household income
tend to suffer less of a financial loss and in some situations may improve their financial situation. (USU,
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111) In rare situations are the fathers able to maintain the same standard of living or improve their
situation.
Now that the father is not living in the same house, he needs to provide a separate home for
himself. Looking at the expenses ahead of the father you have a separate apartment, utilities, food, child
support, alimony (if applicable), bills and debt from the marriage. Besides paying child support,
noncustodial fathers then turn around and provide food, clothing, and shelter for the children when
they spend weekends and other visitation with him. Fathers who are involved with their children spend
more in supporting their children than just child support. Also there are recovery services that help
custodial parents receive child support, however when it comes to getting compensated for marital debt
there isnt much to help the person footing those bills. There is always court, but the expenses of going
to court may not be worth the amount of money you may be entitled to.
In the book Divorce & Money, it gives five basic truths about money and divorce:
In Divorce everything takes longer and costs more
When youre connected to another person financially youre at risk
The IRS is watching your divorce-even when youre not
Cash is King
Youre playing for keep; dont sell off tomorrow for today.
These basic truths are vital to understand, and many people may not even think of some of
the long term financial issues while going through a divorce. It may be wise to consult an attorney or a
financial planner while going through a divorce. It may cost a little more up front, but may save you lots
of unforeseen costs in the end.
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The phrase everything takes longer and costs more is pertinent to understand. Often even the
simplest divorces end up taking longer than planned. Not only is this a good phrase while going through
a divorce but also a good philosophy for life. If you always plan that things are going to cost more and
take you longer than planned you will be better prepared for many things that will arise in your life.
(Woodhouse, 23)
Anytime you are linked to someone financially you are at risk. Especially during the separation
period you dont have much control over spouse running up debt on credit cards, or if they default on
payments. It is important to be on guard, and to protect you. (Woodhouse, 24)
Sometimes you may not think about the taxes during a divorce. Often property is divided
equally at the time of divorce, but down the road when the property is sold there may be big tax
consequences. Rest assured the IRS is going to want their tax money. (Woodhouse, 25)
Often during divorce we dont consider the different value of money at the time. While dividing
property and cash assets we dont consider inflation. Some money may grow more in the long run, such
as mutual funds and stocks, whereas, cars and other assets may depreciate in value. It may be wise to
wait to sell the family house until the market value is better. If you feel pressured by the legal calendar it
may be wise to step back, and take a look from a future-oriented perspective. The decisions made at
divorce will affect you for a long time. (Woodhouse, 27)
When it comes time to divide one household into two, there is rarely enough money to go
around. (Woodhouse, 23) There is a high price of splitting an income that once supported one
household and now try to support two. Usually the support payer feels the amount is way too much,
and the receiver feels it is not enough. (Woodhouse, 23) Each side must anticipate that money will be
tight. It is important to help your family adjust to the new circumstances and standard of living. It is o.k.
to tell your children No, We cant afford it now! Although you may have a hard time telling your child
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they cant have something they want it is important to be honest with them. You can take heart in the
fact that millions of couples have divorced, and millions of children have survived it. (Woodhouse, 36)
Woodhouse walks through some steps that can help a divorcing couple prepare for their new
financial situation. First of all figure out how much money it is going to take for you to get by. Make sure
to plan for major events such as college or marriage of a child. If you plan for these events they wont
take you by surprise. Talk with a financial specialist to help you make the best decisions for your future
life.
How does all of this play into the community? It is estimated that a single divorce in Utah could
cost the taxpayer about $18,000. With approximately 10,000 divorces a year, that could add up to about
$180 million a year. (USU, 109) In the article The Taxpayer costs of Divorce and Unwed
ChildbearingFirst-Ever Estimate for the Nation and All Fifty States, It estimates that divorce and
unwed childbearing costs taxpayers $112 billion each year and $1 trillion each decade. This number
takes into account higher crime rates, drug abuse, education failure, chronic illness, child abuse,
domestic violence, and poverty. With higher poverty rates among the divorced brings more welfare
expenditures such as food stamps, WIC (Women, Infants, and Children), Medicaid, and Medicare.
(Schramm, 8) If, as research suggest is likely, marriage has additional benefits to child, adults, and
communities, and if those benefits are in areas other than increased income levels, then the actual
taxpayer costs of divorce and unwed childbearing are likely to be much higher. (Scafidi, 5) The federal
government and some states have funded programs to help strengthen marriages. When I got
remarried I received a magazine on the different challenges a marriage can bring, and resources to help
strengthen your marriage. Also I know Utah State University has put some effort into educating those
who are in blended families, and providing education to strengthening marriages.
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I was surprised to see how much tax money goes into each divorce. I had no idea each divorced
cost taxpayers so much. As I look at the breakdown I can definitely see where the money goes. The
government is wise in trying to provide programs to strengthen marriages. Strong marriages could save
taxpayer big money.
In researching this paper I have a new understanding for each individuals side of the financial
impact of divorce. I understand that while one side thinks they are paying too much for child support
and the other feels it is not enough. Each side may be correct in their thinking. However, in the effort to
split an income that once supported one household into an income that now is trying to support two,
each side is going to need to make adjustments in their standard of living to try and make the money go
around the best they can. Reiterating a quote from earlier, You can take heart in the fact that millions
of couples have divorced, and millions of children have survived it. (Woodhouse, 36) Somehow all the
financial struggles and stress about money seem work out in the end. Millions have survived.







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Bibliography
Grall, Timothy. Custodial Mothers and Fathers and Their Child Support: 2011. Washington D.C.: U.S.
Government Printing Office, 2011. Web. 7/21/2014.
Scafidi, Benjamin. "The Taxpayer Costs of Divorce and Unwed Childbearing...First-Ever Estimate for the
Nation and All Fifty States." Institute for American Values (2008). Web. 7/21/2014.
Schramm, David. "Counting the Cost of Divorce: What Those Who Know Better Rarely Acknowledge."
The Family in America. Vol. 23 number 3 (Fall 2009). Web. 7/22/2014.
Teachman, Jay, and Kathleen Paasch. "Financial Imapct of Divorce on Childeren and Their Falilies." The
Fututre of Childeren Journal Issue: Childeren and Divorce Vol. 4 Number 1 (Spring/Summer
1994). Web. 7/18/2014.
"What are the possible financial consequences of divorce?" n.d. www.divorce.usu.edu.Lesson 7 Web. 18
July 2014.
Woodhouse, Violet, and Dale Fetherling. Divorce & Money How to Make the Best Financial Decisions
During Divorce. Berkeley: Nolo, 2011. Print.