Money. We love it. We struggle with it. We fight about it. Money touches some of the deepest recesses of our being, the tender spots where insecurities dwell. We fear we won’t have enough, even when we have always had enough to survive in the past. We want to be respected and valued for what we provide and to demonstrate good stewardship. We know money is a useful tool, but it can also be the root of all evil and equated with power. Here are some suggestions to overcome the obstacle of money in your divorce.
A dear friend of mine recently went through an ugly divorce. Initially, she asked for advice, but as the drama unfolded, I watched from the sidelines as she spiraled down the wormhole of the legal battle.
In a previous entry, Family Money Matters, I wrote about the pitfalls of financial dependence in a relationship and how that plays out in separation. In this entry, I’d like to offer a more concrete solution to this scenario.
We’re in the midst of some radical changes in the spheres of marriage and employment. In the twentieth century, social policy in the US was based on the idea that a family consists of a married couple with a breadwinner (Dad) and a stay at home parent (Mom). Within the past 30 years, marriage lost its dominance as the main way women make money and support their children. Nevertheless, it’s still seen as the “default’ mechanism for many families, particularly those on the two extreme ends of the financial spectrum. The two most likely groups of married women to stay at home are those married to men in the top 5% of earners who don’t need to work and women at the other end of the scale who have low earning prospects and therefore can’t afford to work.
As a custody mediator, I often see young people, particularly women, in my office who are in that second category. Typically these women have little education and few job prospects of their own. They usually hook up with someone who has a fairly low-income job. When they get pregnant, they “chose” to stay home with their young children because they can’t find jobs that pay enough for them to put their children in childcare. But then the pressure and stress of unemployment and poverty makes it more likely that their relationships deteriorate.
Now their relationship is ending and the limited financial support they had from their partner is decreased. They will get child support (hopefully) but that is barely enough to support the children. The parent’s expenses are not covered. So they have to piece together bits of moneymaking activity when their children are at school or can be watched by someone else.
In family financial mediations, I help couples equitably divide their assets and liabilities. Together we create columns for accounts and real properties that we then place under one or the others’ name. We divide the credit card bills, auto and school loans. At the end of this, a question often lingers about where each person goes from this point forward and what the future will look like. It’s impossible to equalize their earning potential in my office in an afternoon. It may have taken years to develop the inequity and it may never reach a place of balance if the couple is middle aged or beyond. While alimony takes a stab at addressing this inequity, most alimony settlements fall short of truly creating life-long financial balance, and it can’t even touch the less tangible values of work and career.
Obviously we can’t go back in time. If we could, I would tell these young people not to get themselves into that position in the first place, to stay in school and to build the skills and experience that allow them to be employable throughout their lives. And no one wants to plan for the demise of their relationship when they are just starting out. Nevertheless, about half of all marriages DO end in divorce and the figure is even higher for low income marriages and non-married parents. So, I encourage new parents to consider their skills, experience and education like a bank account. If their relationship were to end right now can they balance the account so both people have (roughly) equal earning potential? If not, what needs to be put in place so that they walk away with as much income-earning ability as their partner?
This is likely to involve some serious conversations. Rather than just focusing on income and who can make more money right now, or taking the path of least resistance, I encourage parents to consider and discuss all options and then make conscious agreements about their family financial structure. This includes:
- Desire & Aptitude –What do each of you really want to be doing? What are your natural skills? Are some better suited for staying home while others more profitable?
- Continual Education & Experience – The parent who stays home with the children needs time to take classes, volunteer, or hold a part time job to attempt to keep the balance sheet balanced.
- Sharing Responsibilities – In order to prioritize both parents’ careers, the parent who works outside the home will have to take care of more work at home. And, the parent who is at home has to allow and encourage this.
- Time Frames – Consider alternating who is the primary breadwinner. Make a decision to do what you’re going to do for 1 or 3 years then to renegotiate.
For parents who are separating or see that in their future, it may be too late to balance the income-potential spreadsheet, but it’s not too late to plan for the future.
- Develop a custody agreement that allows for both parents to work and build their careers. This will ultimately support the children’s long-term financial care.
- Avoid remarrying immediately. Marriage helps out in the short run, but may impede a person from building a career path if it results in repeating the stay at home scenario.
- Work as a team with the other parent. Building a career takes flexibility and support. The other parent will need to by your ally.
Every person going through a transition experiences their own timeline. The challenge with divorce, of course, is that the timelines of the two parties may not be aligned. Here in North Carolina, law dictates that we take at least one year between the date of separation and the final divorce. This imposed timeline has little meaning to a broken or an impatient heart. We move on when we’re ready to move on.
A lovely couple I saw this spring was splitting after about 5 years of marriage. They had a young daughter whom they both cherished. The wife originally contacted me. She had initiated the break up and was energized by the idea of settling their affairs and moving on. The husband agreed to meet in mediation and so we began. We met about 5 times over the course of several months. At each session, the wife came prepared, with a notebook of ideas. In between sessions, she made the calls or developed the plans they agreed upon previously. The man showed up often unprepared or reluctant. As I got to know these two, I watched the woman move the man forward gently, asking something of him and then waiting until he was ready to make that move. I saw him let go of some of his “demands” (such as no new romantic partners for the first year) as he came to accept his new reality. Eventually, they developed an elegant parenting plan. They divided their assets and their debts with a fine chisel. Having the opportunity to follow up with them, I’ve learned that they are co-parenting their daughter beautifully.
Consider what might have happened if they had taken a more traditional path. The woman might have opted to find a lawyer who could get her out of the situation as quickly as possible. She might have withdrawn money from their shared account to demonstrate their separation. The ma might have felt betrayed and lost in this and lashed out by suing her for full custody or accusing her of some type of foul play.
This early phase of separation is a sensitive time. Plans need to be made and matters need to be settled, but often one person is grieving heavily and is not ready to make those types of decisions. I encourage anyone going through this to practice patience and seek constructive advice. Find a mediator or collaborative attorney who can answer your questions and allow for these dual paces. Refuse to be pushed into an adversarial position because of someone else’s timeline. Expect that you will hit bumps along the road and you will need to pick yourself up and keep moving. Avoid comparing your pace to anyone else you know who took a different path. Remember, it took a while to get yourself into this relationship; it will probably take a while to get yourself out.
Here’s a question I’m sometimes asked: when is it OK to give up what you’re entitled to just to get it over with? This is a great question and it gets to the core of mediation. Naturally, there’s no simple answer to this question, but there are a number of issues to consider.
First, dollar value is only one value. Throughout our lives, we choose intangibles that we can’t put a price to: Our sense of peace. The health of our children. Their relationship with their other parent. Ease in a working relationship. Every day, we make big and small decisions where we trade financial value for something that makes our life better. We go to a particular chiropractor because we feel comforted by her care. We get our coffee in a pricey café rather than making it at home because it feels good to be out. We attend an expensive college because we hope it will get us a better job. Often, well-meaning friends, family and attorneys will attempt to boil down your situation to a spreadsheet and just look at the bottom line. I’m not saying you should sell yourself out, but consider the non-financial cost/benefit to an agreement. Related to that, consider the long-term financial factors of a protracted divorce. Factor what it might cost you to continue to fight the battle and whether you’d really prefer to see that money in the hands of attorneys rather than your ex-partner. I had a client once say to his ex-wife after a lengthy alimony discussion “I’ll give you the amount your asking in the hope that you’ll be able to put some of it into an educational account for our kids because otherwise it’s going to end up lost to legal fees and no one will benefit.”
Secondly, the most stable arrangement is perceived as fair by both sides. I’ve seen plenty of cases where one party gets a fantastic deal and feels pleased by the outcome of the divorce, while the other party ends up struggling to make ends meet. In our most vindictive moments, we may believe that is what we want, but the truth is, that scenario becomes a breeding ground for resentment and anger. It’s a cliché in mediation that a good outcome leaves both parties feeling a little disgruntled.
Third, (and forgive me for repeating myself with this one) divorce creates fear, generosity soothes it. People rarely make good decisions when they are fearful. But nearly everyone is fearful as they begin the separation process. They are unfamiliar with the laws, afraid of what their ex might do, possibly afraid of being alone or financially ruined. If you can make a gesture toward generosity, you convey to your ex-partner that s/he doesn’t need to be afraid of your intentions. You will continue to behave as the upstanding, decent person you’ve always been. This can reap great rewards in the long run as you make financial and/or custodial decisions together.
Lastly, if you are a parent, you are starting a new relationship with your ex-partner. It’s a business where you are together charged with raising fantastic children. In weighing out the choices and deciding whether or not to take less than you feel entitled to, factor the stability of your new business arrangement into the equation.
Having said this, there are of course times when you want to hold your ground and not compromise your stake. Often people are willing to let everything go in the initial stages of separation because they simply want out, they feel pressure from their ex, or they feel guilty about the way the relationship dissolved. If you feel you may be making a rash decision just to get through an ugly process, give yourself a week or a month to sit with your agreement before you sign. Relax and wait for things to get better.