Divorce Finance: Money Management Tips For Women (VIDEO)

Personal finance expert Jean Chatzky, host of RLTV's “Cash Call,” dedicated Tuesday's episode of her half-hour call-in show to divorce over 50. She talked to The Huffington Post about how women in particular can avoid the financial fall-out that may accompany a marriage’s demise -- as well as the biggest mistake that she says women often make during divorce.

Couples over 50 are divorcing at a higher rate than ever. What's different about divorcing later in life today?
I think what we’re seeing is a shift overall in how devastating divorce has to be. There used to be a perception that if you’re a woman and you get divorced, that was sort of a death sentence financially. Now, because of the trajectory of women in terms of their earning power, it’s not such a death sentence. [Over the past three-four years], women’s income has gone up about 2.9 percent. Now, it’s not as much of an increase as we’ve seen in men, but it’s not like it’s fallen off a cliff either.

What financial steps do women need to take when going through a divorce?
Any person needs to go through the process of figuring out what their new cash flow statement is and what that needs to look like. Whenever you go through something like this, you need to start fresh and you need to start looking at, “What am I going to have coming in?” and “What am I going to have coming out?” and “How can I sustain myself?” That’s a matter of looking at not just your income, but also the assets that you take away from the marriage. The women who do it right don’t say, “I’m staying in my house because I have to -- I just can’t imagine leaving it.” They say, “I’m going to stay in my house because I can afford to.”

Do you think women are susceptible to emotional decision-making during a divorce?
Yes, I think that’s the number one divorce mistake that women have made through the ages. Trading the house for the pension, so to speak. [Divorce] is a very emotional time. So much is changing that you want to control anything that you can to keep it from changing, in many cases. And it really needs to come back to the numbers.

Can you speak more to this idea of “trading the house for the pension”?
There are people who are very emotionally attached to their homes. The home is generally the largest asset or one of the two largest assets, along with the retirement account. The home costs you money to maintain, the pension does not. So the question becomes: If you’re the spouse who wants to stay in the house, can you actually afford to do that? Do you have an income that will allow that? And, if that’s the choice you make -- and you swap the house for a pension or retirement account -- what are you going to do about retirement?

What’s the most valuable tool in a woman’s arsenal as she goes through the divorce process?
I think you need a good adviser, not just an attorney, but someone on the finance side. It can be your accountant; it can be your financial adviser -- someone who can look at what’s happening in your life if you don’t feel that you can do that for yourself and who can do it objectively. The other thing to focus on is your income. One of my money rules -- and I have a new book out called "Money Rules" -- is that your job is your most important investment. Your earning power is key. Focus on that. Focus on getting yourself out in the work place and earning some money. It’s good for you not just financially, but I think emotionally.

Check out a clip of the "Cash Call" episode below:

Viewers can submit questions to "Cash Call with Jean Chatzky" via RLTV’s Facebook page and Twitter feed (@RLTVLive), Jean Chatzky’s Facebook page and Twitter feed (@JeanChatzky), Skype (Cash.Call) or phone at: 1-855-550-RLTV (7588).

Comments

[RML 1]

03:52 PM on 04/20/2012

Women need to be financially independent when entering a marriage in the first place. The days of growing up and a husband will take care of you are over. Have your own career, retirement, investment, savings, assets, etc. The trick is to start very young... You don't need $100,000 to start a retirement account... so do it.

[JaneWarren]

08:55 PM on 04/19/2012

Appreciating your insights and your comments about "any person needs to ..." Your advice is just as valid for men as for women. I am a divorce mediator and I see people emotionally attached to their house and emotionally attached to their pension. So just like the house, sure they get to keep their pension, but now they're destined to rent for the rest of their lives. Divorce is a time of huge change. The more people try to resist this and try to keep everything the same somehow, the more financial difficulty they often get themselves into. Really consider splitting the pension, downsizing your home, and giving yourself some financial breathing room!
Jane Warren
creatingacivilizeddivorce.com

[mrhandyman3105]

12:15 PM on 04/19/2012

Men, regardless if you're the cause of the divorce, start by taking the initiative and the high ground, and be the "first" to all legal actions and offer a "fair" and I mean "fair" settlement of money, property, etc.. That way you will appear to the court as trying to be reasonable and anything she does above the fair settlement will appear as vengeful which any judge may not like. Otherwise you "will" be taken to the cleaners. 9 times out of 10 the man is always "responding" to the legal action instead of "initiating" the action.

[tqjones44]

11:00 AM on 04/19/2012

Is there any advice about what men should do if they are getting screwed over by divorce and victimized?

[mrhandyman3105]

12:08 PM on 04/19/2012

Yeah, if you know she's going to divorce you, don't wait for her to initiate the legal action. Take the initiative and be the first to the punch. Over half the time, the first to everything gets the upper hand.

[El Chingaso]

12:19 PM on 04/19/2012

1) Never get married.

2) If one has to (whatever the reasons), "iron-clad" prenup (not one prepared on-line, either).

[Drewood]

10:34 AM on 04/19/2012

I guess us guys are on our own?

[ArmoredSaint]

09:05 AM on 04/19/2012

I find it funny that you see all these articles about how a woman can protect her financial interests in a divorce. Isn't it usually the man thats going to need financial protection? The women already have a team of finacial protectors and hit men to take care of that- they're called family law courts. Isn't it enough for them to have a whlole court system that's sole pourpose is to skewer the guy and drain him of every penny on her behalf? She needs another team of professional thugs to beat him about the head some more?

[ncrespi]

06:55 PM on 04/19/2012

Oh, puh-leeze. You're responding as if it's still the Father Knows Best Days of the 50's where husband worked & wife wa s ahousewife. Those days are long gone for the current young-to- middle age couples. Hubby is just as likely to financially shaft wifey. I know, becuase I'm one
of the ex-wives that was...and far from th eonly one. In fact, I wa sdarn lucky I didn't end up
paying HIM alimony since he never held a job!

[SingleMomBooks]

08:58 AM on 04/19/2012

I agree an advisor in addition to an attorney can be most helpful. There are now CDFA: Certified Divorce Financial Advisors. Look for someone with this designation, they have been trained to help specifically with the divorce process.

[PiratesForObama]

06:27 AM on 04/19/2012

Some women make the cardinal mistake of marrying for money to begin with.

[ncrespi]

06:57 PM on 04/19/2012

Some men make the cardinal mistake of marrying women for what they earn and/or possess to begin with.

[cyoohoos]

06:27 AM on 04/19/2012

The best decision I ever made was to let the house go up for sale. I gained something I never would have had otherwise, mobility. When I think about how I wanted to keep that house because I never thought I would be able to have anything as nice on my own I want to step back in time and slap myself.

[jedwightn]

11:42 AM on 04/19/2012

In reality, houses are an anchor.

[sensimilla]

05:48 PM on 04/19/2012

for me my house is an investment for my retirement. With $250k in equity over the last decade of ownership(even at the bottom of the market), i think i made the right decision.

Now that i am divorcing, i am going to keep the house if at all possible. It would be crazy to sell it now.