Focus on priorities to deal with financial reality
Bursting into tears in the bank manager’s office was not one of Karen Simons’ finer moments. But the 43-year-old from Duncan, B.C., had just been told she didn’t qualify for a “lousy $1,000 line of credit.” Newly separated from her husband, Simons had come up against the cold, hard fact that banks don’t regard single moms as a good credit risk. In fact, even after she and her ex-husband sold the family home and split the profits, she still wasn’t eligible for a mortgage.
In Simons’ traditional marriage, her husband held all the financial cards. “The hydro bill and phone bill were in his name. I didn’t even have my own credit card; I had my little allowance every week for food and clothing,” she says. “When you’re young, you don’t think about these things, but then you go to apply for a hydro account and they want a cash deposit up front. I’ve paid hydro bills in this province for 25 years.”
The fact is, whether you’ve been a stay-at-home mom or an equal contributor to the household income, the end of a marriage brings some financial fallout. No one is richer after divorce, says Akeela Davis, a Vancouver financial planner and author of the book Divorce Dollars: Get Your Fair Share. And post-40 divorcées often face additional challenges. “If you’re 25 or 30 going through a divorce, you have time to build up your own retirement fund afterwards,” she says. For those over 40, it can be harder to catch up.
That said, Davis asserts, the breakdown of a marriage doesn’t have to mean a slow slide into penury. With a plan in place, it is possible to survive and even thrive. Here’s what to keep in mind:
Set priorities
Where once you and your ex’s income went to support one household, now the both of you are supporting two. That’s the financial reality of divorce. The key to managing is to focus on meeting the needs you see as most important, says Davis. For Simons, minimizing the disruption to her kids, then eight and 10, was the first priority.
That goal led directly to her decision to give up the “dream home” she and her ex had bought and fixed up together. “I just knew there was no way I could maintain it,” she says of the big 1912 home. “If I had to re-roof it, I couldn’t manage.” With the help of her parents (who had to take on the mortgage because she wasn’t eligible), Simons used her half of the proceeds from the home sale for a down payment on a smaller house in the same neighbourhood. The result: Her kids still attend the same school with their friends, and Simons has enough cash left each month to pay for extras, such as field hockey and piano lessons.
Many women fixate on keeping the family home, says Jane Tremblay, a financial planner with Assante Wealth Management in Orillia, Ont., and a member of Collaborative Practice Toronto (an organization that supports collaborative divorce). That might be the right choice if you’ve got a smaller place, or your first priority is to nail down housing expenses over the long run. But, as with all financial decisions, consider the costs and alternatives. Are you better off in an apartment or condo? Will you work more hours to keep things afloat? Says Tremblay: “A house isn’t very good at creating income or paying the grocery bills.”
