In MagnifyMoney’s 2017 Divorce and Debt Survey, we polled a national sample of 500 divorced U.S. adults to understand how money played into the end of their relationship.
Here are our key findings:
AMONG ALL SURVEY RESPONDENTS
More money = more problems
Among all respondents, 21% cited money as the cause of their divorce.
In fact, the more money a respondent earned, they more likely they were to cite money as the cause of their divorce.
Among people who earned $100,000 or more, 33% cited money as the cause of their divorce.
By contrast, only 25% of people who earned $50,000 to $99,999 cited money as the cause of their divorce. And the lowest income-earners, those earning $50,000 and under, were the least likely to say money was the cause of their divorce at just 18%.
Money might cause more stress for younger couples
While rates of divorce rose along with the amount of a couple’s’ earnings, the opposite seemed to be true when it came to age. Younger couples reported that financial issues drove them to divorce, while the rate went down for older couples.
- Among 25-44 year olds: 24% cited money as the cause of their divorce
- Among 45-64 year olds: 20% cited money as the cause of their divorce
- Among those 65 and over: 18% cited money as the cause of their divorce
AMONG SURVEY RESPONDENTS WHO CITED MONEY AS THE REASON FOR THEIR DIVORCE…
Divorce often led to debt
Between legal fees, paying for your own expenses instead of sharing the burden with a partner, and other costs that come up when you choose to end a marriage, divorce gets expensive. For couples who already faced financial problems, the added expense often meant getting into even more debt.
Well over half (59%) of respondents who cited money as the cause of their divorce also said they went into debt because of their divorce. And a whopping 60% said their credit score fell after the divorce. By comparison, just 36% of the total survey group said they went into debt because their divorce, and only 37% said their credit score suffered.
Among those who cited money as the cause of their divorce…
- 2% of respondents said they got away with $500 or less in debt.
- 13% said they racked up debts of $500 to $4,999.
- 14% said they took on between $10,000 and $19,999 worth of debt
- 23% said they owed $20,000 or more
Among all survey respondents…
- 2% were less than $500 in debt
- 8% were $500 to $4,999 in debt
- 6% were $5,000 to $9,999 in debt
- 8% were $10,000 to $19,999 in debt
- 12% were $20,000 or more in debt
Overspending was the biggest source of tension
Nearly one-third (30%) of those who said that money was the reason for their divorce also said overspending was the most common problem they faced. Overspending can easily add up to carrying credit balances when the cash runs out — and in fact, credit card debt was the second most common money problem these respondents cited.
Bad credit was also a problem, along with other types of debt like medical and student loan debt. Most financial issues seemed to stem from bad cash flow habits, however. Only 3% said bad investments caused trouble within their relationships.
Financial infidelity was rampant
When overspending and debt become issues within a marriage, partners may feel compelled to hide mistakes and bad money habits from each other. In fact, 56% of survey respondents who said money was the reason for their divorce also admitted that they or their spouse lied about money or hid information from the other person. By comparison, just 33% of all divorcees surveyed said they lied or were lied to about money during their marriage.
Among the survey respondents who cited money as the cause of divorce…
- 37% said their spouse lied to them about money
- 8% said they lied to their spouse about money
- 10% reported that they both lied to each other.
Among all survey respondents…
- 24% said they their spouse lied about money
- 3% said they lied to their spouse about money
- 5% said they both lied about money
Most would rather keep separate bank accounts
With financial stress causing trouble in relationships, it’s not too surprising that 57% of people who cited money as the cause of their divorce said married couples should maintain separate bank accounts. Forty-three percent maintained that within a marriage, couples should keep joint accounts — even though their marriages ended in divorce.
Most failed to keep a budget
A whopping 70% of respondents who said their marriages ended due to money said they didn’t stick to a budget during their marriage. A budget is such a simple tool, but one that’s essential to tracking cash flow and understanding where money comes from — and goes.
Most don’t believe prenups are necessary
Dealing with divorce is never easy, especially when financial problems caused the separation and continue to plague couples after the paperwork is signed thanks to new debts.
Still, 58% of survey respondents whose marriage ended in divorce due to money said they didn’t think couples should get a prenuptial agreement before tying the knot.
How to deal with your finances after divorce
Here are a few tips to help you get back on your feet, financially speaking, once your divorce is finalized:
Recognize your bad money habits. Money issues can negatively impact a relationship, and even cause it to end. But they can hurt you as an individual, too.
Create a budget. Remember, most people whose marriage ended due to financial stresses didn’t keep a budget during their relationship. Doing so now will help you stay on top of your money and know exactly where it goes. That will allow you to make better spending decisions and help prevent taking on even more debt.
Don’t make major money decisions right away. If you just finalized your divorce, you may feel like you need to make major changes or choices right away. But take a moment to slow down and give yourself time to heal. You shouldn’t make emotional decisions with your money — and going through a divorce is an emotional time. Wait until you can think more clearly and rationally before doing anything with your assets, cash, or career.
Money should not be your therapy. Because divorce can do a number on you, mentally and emotionally, you may need help with the healing process. But that does not mean retail therapy! It’s tempting to spend on material things in an effort to make yourself feel better, but any happiness you feel from shopping sprees is temporary and fleeting. It can also leave you into even more debt. Put away your credit cards, stick to cash, and use your budget to guide you.
Work to rebuild your credit. 60% of people reported their divorce hurt their credit. If your credit suffered too, take steps to rebuild it. Pay down debts, make all payments on time and in full, and don’t continue to carry balances on credit cards. Try to avoid taking out too many new loans or lines of credit all at once.
You should also work through this checklist of important actions to take after your divorce:
- Update your beneficiary information on your accounts and insurance policies.
- Update your will and estate plan.
- Make sure all of your assets are in your name only and no longer jointly held.
- Cancel accounts or services you held jointly, like utilities or cable. Open new accounts for you in your name.
- Allocate a line item for savings in your budget. You want to start rebuilding your own cash reserves. Set an automatic monthly transfer from your checking to your savings so you don’t forget.
- Close joint credit cards and get a new line of credit in your name.
- If you have children, keep careful records of expenses for them that you plan to split with your ex, in case of disagreements. Ideally, make sure your divorce agreement includes an explanation of how child care will be split and who is responsible for what, financially.
- Think about whether you need to hire new financial professionals to help you. You may want to find a new financial planner and certified public accountant. You’ll want to update your financial plan to reflect the fact that you’re no longer married.
Survey methodology: 500 U.S. adults who reported they were in a marriage that ended in divorce via Google Surveys from Feb. 2 to 4, 2017.
Featured Accounts AD
Goldman Sachs Bank USA High-yield 12 Month CD
Ally Bank High Yield 12-Month CD
CIT Bank Money Market Account
Goldman Sachs Bank USA High-yield Online Savings Account
* All banks listed are a Member FDIC.