Will Divorce and Austerity Force You to Financial Independence?

Many people rely on marriage as a financial plan.  In other words, one spouse – often the wife – is primarily or wholly financially dependent upon the other. Many little girls were told to find a Prince Charming – not just for good looks, but for financial support – and that has often led wives to accept and endorse the idea of being supported by someone as the fantasy they were told to believe in.

“Catch 22”

In theory (and in fairy tales) the search for a Prince Charming as a financial plan is fine, but in real life – and in a society where divorce is prevalent – this is a bad idea. When divorce strikes, the person who is financially dependent is literally at the mercy of others – either for her spouse to agree to provide support, or for a court to force the spouse to provide support. Also, often the dependent spouse has no bank account of her own or no access to the couple’s joint bank accounts, which frequently means an inability to retain legal counsel for the divorce. This creates a “catch-22”: the dependent spouse needs to hire a lawyer to seek support, but cannot do so without access to the necessary funds.

An Outdated Model

This scenario is not one that most spouses expect to find themselves in. In hindsight it is obviously a mistake to be without personal financial resources when divorce occurs, but hindsight is never a useful perspective. The better view is for each spouse to remain financially independent during the marriage by being employed (to the extent possible with child rearing responsibilities), or for a non-working spouse to keep their skills current should they need to enter the job market. No, this is not a fairy tale, and for good reason – it reflects the reality that dependent spouses too often only learn upon the death of or divorce from the wage-earning spouse.

For most people, the economics of having only one income, thereby allowing a spouse to remain home to raise children, is becoming an outdated model. Whether this is good or bad is debatable, but it for most families it is economically unrealistic during a marriage to be supported on only one income, and that is especially obvious when a divorce occurs. If one spouse has been financially dependent upon the other when a divorce strikes, austerity measures must be implemented. This will be difficult and even painful. The formerly dependent spouse will likely need to get a job and make extreme cuts in the monthly budget. However, this should be viewed as a long-term positive result of the divorce, because the formerly dependent spouse will diminish or escape that dependence and achieve partial or full financial independence. It is doubtful anyone would say financial independence is bad.

The Silver Lining

Many clients I have known over the years resist seeking their own financial independence because they feel the other spouse should “pay” (often as a form of retribution). While there may in fact be a legal obligation to provide support (most typically there is when one spouse has been the breadwinner), I often suggest that the client with this emotional need to punish should imagine the following: “What if your former spouse dies or becomes disabled, and can no longer pay support? Unless there is life insurance or disability insurance in place – sufficient to provide financial support for the rest of your life – what will you do?” It is this prospect which often makes obvious the need for the dependent spouse to work toward financial independence.

Remember, a fairy tale is a story that not only isn’t true, but couldn’t possibly be true. The need to be financially independent is the reality of life for virtually everyone, which must explain the lack of fairy tales about jobs, budgets and financial independence. For the person who is not financially independent when a divorce strikes, the resulting need for austerity and employment can bring the financial independence that is the silver lining of the divorce.