One of the things that I’ve noticed when I mediate is that one person in a couple is often much more financially literate than the other. What do I mean by this? That one person has a better sense of what things cost, what the family needs, and what their financial futures might be. Often one person pays the bills and the other person has only a vague idea of what the household budget is — just that the credit card is paid each month.
This often surprises me, but it shouldn’t. We are not really taught in school how to deal with money the way we are taught how to read. Most of us are not formally taught how to figure out a budget, how to keep track of expenses, or which obligations to pay first. We might learn this from our parents — or might not. Just as it is important for both adults in a household to know how to cook or to do the laundry, it is important for both partners to know how to pay the bills and manage a budget.
This really hits home when couples are thinking about living in two households. One of the most challenging aspects of divorce (at least in New York City where housing costs are sky-high) is to stretch the budget — that used to be just enough for one home — to cover two homes. Thus, it is especially important for both partners to be financially literate — that is, at least to understand what they have coming in, what their expenses are, and to come up with a plan for how to fill in the gap. (Hint: either increase income or decrease expenses.)
It can be quite overwhelming. Sometimes I see the less financially oriented person give up, saying something like, I’m an artist — or stay-at-home parent, or dreamer — you know I don’t think that way. And this might be the first time in their adult life that they have to deal with such mundane things as making sure the light bill gets paid.
In this type of situation, I often recommend working with a financial coach — someone who can educate and guide the less sophisticated partner, to help them make smart financial decisions.
There is a whole industry built around divorce financial planning, and there are some wonderful resources available. Here are a few:
- The Institute for Divorce Financial Analysts has some good worksheets available for free, as well as a directory of professionals.
- I personally like the book, Money & Divorce: The Essential Roadmap to Mastering Financial Decisions, by my colleague, Lili Vasileff.
- And another colleague, Stacy Francis, started Savvy Ladies to help women become more financially literate.
- Although I’ve never used it, several of my clients have recommended the app, Mint, for tracking expenses and getting a realistic view of what they’ve got.
Do you have any favorite tools or resources that you’d recommend? Please email me and let me know!
Facing a new life on your own can be daunting. Don’t hesitate to ask for help when you need it.
Joy S. Rosenthal, Esq.
Rosenthal Law & Mediation
225 Broadway, Suite 2605
New York, New York 10007