We talk about finances a lot, and it might seem like much of our concern is on the financial aspect of divorce – but at the end of the day, a divorce is just that: a financial transaction. The emotional and personal elements aside, the legal components of a divorce revolve primarily around the need to separate co-mingled finances and assets.
So when it comes to preparing yourself – whether for a healthy relationship or a smooth divorce – there’s a simple resolution that every person should make, and it doesn’t have to be January 1 to get started!
Getting More Involved In Your Finances
When it comes to relationships, it’s not uncommon for one individual to be the more financially savvy of the pair. Maybe they had a better financial education, or maybe they’re even a finance professional by trade. Regardless of the reason for the disparity, all too often one member of a couple finds that they are relatively in the dark when it comes to money matters.
That might not be too problematic while the relationship is healthy – if the bills are getting paid and everyone’s needs are being met, this kind of division of labor can work just fine for the average couple. It’s when a relationship starts to deteriorate and separation comes into the picture that this one-sided financial know-how can become an issue.
Who’s Most Likely to Be Impacted
In 2014, Fidelity Investments released some troubling survey results – they found that 25% of the women surveyed had zero involvement with the day-to-day money matters and financial decision-making.
Women’s financial literacy still lags behind that of men, primarily due to socialized norms that men are “better” with money than women and the not-too-distant social norm that men were the primary or sole breadwinner of the household. Even when women are involved in financial matters, it tends to be more about day-to-day spending and budgeting, instead of long-term financial planning.
How Anyone Can Start Becoming Financially Literate
The key to financial literacy is identifying the components that make up the four key facets of one’s finances: income, expenses, assets, and liabilities.
- Income. How much money you receive on a weekly, monthly, and/or annual basis between your job, investments, spousal support, etc.
- Expenses. How much you spend on routine purchases like groceries and clothing, and ongoing needs, such as rent, insurance, and car payments.
- Assets. What you own – everything from a nice camera or a computer, to a house, a car, or even a retirement plan.
- Liabilities. What you owe – your credit card balance, your mortgage, and any other debts that you have to pay back.
Once you have a handle on these four pieces of your finances, everything can be categorized and you can identify how much you have available each month to pay down debt and save for the future. Becoming financially literate can lead to a lifetime of financial well-being, and that’s definitely a resolution worth making.