5 Ways Divorce Can Impact Your Finances

The end of a marriage can be a difficult time for anyone. There will be a lot of anger and emotion and there is a lot of legal wrangling to consider. Unfortunately, when you have decided to go your separate ways, it is never as easy as you might have hoped. One of the biggest obstacles to overcome is the division of your marital assets. This can cause more rows than the issues that led to your divorce in the first place. Here are five ways divorce can impact your finances. 

Division of Assets

Assets are divided depending on the state you live in and the decision of the court. Some states require assets to be split straight down the middle and others allow the courts to decide asset division on a case-by-case basis. Getting divorced can also be a lot cheaper in some states than others, and this can affect your remaining assets. Top10 has a useful breakdown on this, so click here to find out more. 

Alimony or Child Support Payments

Depending on the financial position of you and your ex-partner, you may be asked to make alimony or child support payments. Usually, if the children are going to live with you most of the time after the divorce, you will receive payments, and if your children are going to live with your ex you will be expected to make payments. This can have a massive impact on your finances whether you are the giver or the receiver.

The giver will have to surrender part of their income to support their ex-partner and their children. This could amount to more money than you are used to paying, depending on how you split the finances when you were married. You will also have to find somewhere to live and pay the rent or mortgage, as well as all the bills. This can get expensive.

You may think you are going to be better off if you are in receipt of this money. However, your new living arrangements may affect your ability to work as many hours as you used to, which can reduce your salary. You may find that you are worse off, especially if these payments form most of your income. If your ex-partner earned more money than you, it can be difficult no longer having that income to rely on. However, you are still likely to have the same living costs as you did before, as chances are your bill payments may not change a lot. This can have a massive impact on your finances. 

Your Credit Score

When you were married, your joint assets helped to improve your credit score and keep it higher. However, once you have divorced and your assets have been split, you may find that your credit score drops. You will no longer have many of the assets that gave you a high credit score, such as a mortgage, and divorce can cause problems such as short-term cash flow issues, which means that bills may not get paid on time, as well as bigger issues such as mortgage foreclosure or bankruptcy. This can affect your credit score, which can affect your ability to get credit in the future. 

Real Estate

Most married people use their joint income to buy the home they want for themselves and their families and then buy the property in joint names. It is typical for a mortgage lender to use an income multiple of around 3.5X joint income to decide how much money they are prepared to lend you. However, once you are divorced, a mortgage lender will base their decision on your income alone. This means that they will be prepared to lend you a lot less than they would when you were married. If you were the main earner, this might not affect you too much, but if you earn the same amount or significantly less than your ex-partner this will have a significant impact on how much money you can borrow. 

Another factor to consider is that you would have split the equity in your marital property as part of the divorce settlement. This means that you will have a much smaller deposit to put down on a new home. This will have a huge effect on the size and type of property you can buy and for most people, their property is their biggest asset. 


The value of your retirement plan counts as an asset. The court can divide this as part of the divorce settlement. This means that you may owe your ex-partner half of what your retirement plan is worth. This can have an enormous impact on your retirement planning as you may no longer be able to do the things you had planned in retirement. For some, this means that they must delay their retirement or put it off altogether. 

Here are five ways divorce can affect your finances but there may be others. Speak to your attorney to find out what your finances are likely to look like after your divorce.