The Mint app has shut down as of Jan. 1, 2024. For alternatives, check out CNBC Select's ranking of the best budgeting apps.
Divorce can disrupt nearly everything in life, but many couples underestimate just how much it will reshape their finances.
"There are three aspects of your divorce that you need to deal with: emotional, legal and financial," says Amy Colton, a Texas-based Certified Divorce Financial Analyst® and founder of Your Divorce Made Simple. "And for some reason, the financial piece seems to be the one that's neglected the most."
CNBC Select spoke with four financial experts about what soon-to-be divorcees should know and how they can make uncoupling as cost-effective as possible.
What we'll cover
- Your monthly budget
- Your credit score
- Your retirement portfolio
- Your taxes
- Your housing
- Your insurance coverage
- Your court costs
- Bottom line
How a divorce can change your personal finances
From the moment you and your spouse say "I do," everything the two of you earn is considered part of a marital estate, unless those earnings are protected by a prenuptial agreement or held in a trust, says Victoria Kirilloff, a California-based Certified Divorce Financial Analyst® and founder of Divorce Analytics.
So, if you don't have a prenup, everything is on the table when you or your spouse initiate a divorce. That's why the first financial step of any divorce is creating a balance sheet, or a list of all your assets, says Chad Willardson, a California-based Certified Financial Fiduciary® and the founder of Pacific Capital.
CNBC Select recommends meeting with a financial advisor during or after your divorce to get your feet back on the ground, because your divorce could affect each of the following:
1. Your monthly budget
In a typical divorce, half of your income streams will disappear since a two-income household will become a one-income household. So, if you weren't earning any money when you were married, and you were dependent on your spouse's income, then you could be stepping into a zero-income household, unless you have certain circ*mstances that may entitle you to receive a portion of your spouse's income after the divorce.
Willardson pointed to a statistic from the Government Accountability Office which reports that, after a divorce, a woman's household income drops by an average of 41%, almost twice the income drop experienced by men. The division of your marital assets will likely thrust your personal finances into a new era, and you'll likely need to adjust your budget accordingly.
"Alimony and spousal maintenance are going the way of the dinosaur," says Nancy Hetrick, an Arizona-based Certified Divorce Financial Analyst® and the founder of Smarter Divorce Solutions. "The vast majority of states now only award alimony on a rehabilitative basis."
In other words, if you're of working age, most states now expect you to reenter the workforce after a divorce if you've been a stay-at-home spouse, says Hetrick. Still, a few states like California are still very pro-spousal support, says Colton.
While you're much less likely to pay or to receive spousal support than you were twenty years ago, child support is still a widely expected cost of divorce. Child support payments vary widely from state to state, but according to Custody X Change, the average child support payment in America is more than $700/month.
To put it simply, regardless of your financial position during a marriage, you'll likely have less money coming into your household after a divorce, and you may not be able to afford all the things you used to when you were married. A budgeting app can help you understand the new lay of your financial landscape — some of our favorites include Mint and You Need a Budget.
Mint
Learn More
Information about Mint has been collected independently by CNBC Select and has not been reviewed or provided by Mint prior to publication.
Cost
Free
Standout features
Shows income, expenses, savings goals, credit score, investments, net worth
Categorizes your expenses
Yes, but users can modify
Links to accounts
Yes, bank and credit cards
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android)
Security features
Verisign scanning, multi-factor authentication and Touch ID mobile access
Terms apply.
You Need a Budget (YNAB)
Cost
34-day free trial then $99 per year or $14.99 per month (college students who provide proof of enrollment get 12 months free)
Standout features
Instead of using traditional budgeting buckets, users allocate every dollar they earn to something (known as the "zero-based budgetingsystem" where no dollar is unaccounted for). Every dollar is assigned a "job," whether it's to go toward bills, savings, investments, etc.
Categorizes your expenses
No
Links to accounts
Yes, bank and credit cards
Availability
Offered in both the App Store (for iOS) and on Google Play (for Android)
Security features
Encrypted data, accredited data centers, third-party audits and more
Terms apply.
2. Your credit score
Your relationship status doesn't directly affect your credit score, but a divorce can affect many of your financial habits and thus indirectly lower your credit score.
For instance, it's easy to forget to make payments on joint debt – like on a shared credit card, car loan or mortgage – throughout the divorce. Even after a marital settlement, your ex-spouse might be held responsible for making certain payments. But if your name is still attached to those accounts, your credit score will drop if they miss a payment.
It's also common to be an authorized user on a spouse's card. If your spouse removes you as an authorized user, your credit utilization ratio ( the percentage of the total credit available to you that you're using) will rise as your overall credit limit decreases. That's bad, since a high credit utilization ratio can deal a significant blow to your credit score.
It's smart to monitor your credit score regardless of your relationship status, but it's especially important during and soon after a divorce. You should consider using a free service like Experian to monitor your credit score automatically and to view your credit report, which will show you what loans and credit cards are under your name.
Experian Dark Web Scan + Credit Monitoring
On Experian's secure site
Cost
Free
Credit bureaus monitored
Experian
Credit scoring model used
FICO®
Dark web scan
Yes, one-time only
Identity insurance
No
Terms apply.
To limit your divorce's impact on your credit score, consider freezing your credit. This way, new credit can't be approved under your name while you go through your divorce, preventing a spiteful ex-spouse from taking out "revenge debt" in your name. You should also close joint accounts, though be aware this will affect your credit utilization ratio and subsequently your credit score.
Hetrick recommends having a credit card in your name long before a potential divorce. Not only will this help you establish a source of credit solely in your name, it also guards against the possibility that your spouse could cut you off financially at the onset of the divorce.
3. Your retirement portfolio
Generally speaking, retirement savings accrued during a marriage are part of the marital estate and subject to division, says Hetrick. Depending upon which state you live in, your retirement accounts can be considered community property or equitable distribution unless there is a valid pre-nup in place.
In community property states, any retirement savings are considered joint earnings and are divided equally. In equitable distribution states, the state's courts will divide retirement savings equitably but not necessarily equally.
If you were married to your ex-spouse for more than 10 years, you can access up to 50% of your spouse's Social Security benefit (and vice versa) as long as you are still divorced and of retirement age. Accessing this benefit doesn't reduce your ex-spouse's Social Security payout; they will still receive all of their Social Security benefits, and the government will cover the difference, says Kirilloff.
For older divorcees, retirement account division is perhaps the most consequential financial implication of the divorce. You'll likely have to reassess your retirement plans to make sure your savings are on track.
One of the most cost-effective ways to keep track of your retirement savings is by using a robo-advisor like Betterment or Wealthfront, which can create a custom portfolio for you based on your risk tolerance, time horizon and financial goals, and then automatically adjust your investments down the road.
Betterment
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn't require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
Fees
Fees may vary depending on the investment vehicle selected, account balances, etc. Click here for details.
Investment vehicles
Robo-advisor: Betterment Digital Investing IRA: Betterment Traditional, Roth and SEP IRAs 401(k): Betterment 401(k) for employers
Investment options
Stocks, bonds, ETFs and cash
Educational resources
Betterment offers retirement and other education materials
Terms apply. Does not apply to crypto asset portfolios.
Wealthfront
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
Fees
Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance
Bonus
None
Investment vehicles
Investment options
Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
Educational resources
Offers free financial planning for college planning, retirement and homebuying
Terms apply.
4. Your taxes
Changing how you file your regular income taxes – single or jointly, with or without dependents, depending on custody arrangement – significantly changes your tax payment, Willardson says.
"When you're married, you get a great deduction. I mean that you pay pennies, it seems like, on the dollar compared to having a single-filer status," Kirilloff says.
In 2013, The Atlantic reported that a single woman could pay anywhere between about $500,000 and $1 million more in her lifetime on taxes than her married counterpart. Married couples in 2020 were only taxed 10% on their first $19,750of taxable income; those who filed separately only received this 10% rate on taxable income up to $9,875.
If you don't already consult with a tax professional, you definitely should look one up during the divorce so you can understand the implications of your new filing status.
5. Your housing
When going through a divorce, it's common that either you or your spouse will have to finance new housing arrangements after the divorce, and living alone can be expensive. You'll likely now be shopping for a house with just one salary instead of two.
If you're on a tight budget after a divorce, CNBC Select recommends using a mortgage lender with a low minimum down payment and flexible loan options, like PNC Bank, which offers USDA loans in addition to other standard mortgage options.
PNC Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms
10 – 30 years
Credit needed
620
Minimum down payment
0% if moving forward with a USDA loan
Terms apply.
Read our PNC Bank mortgage review
House shuffling can have major tax implications as well. Colton points out that you can sell your primary residence exempt from capital gains tax on the first $500,000 of equity if you are married and filing jointly. However, if you get divorced and subsequently file as single, only the first $250,000 are exempt from capital gains tax. For example, consider a home that has $500,000 in equity, and you or your ex-spouse decide to sell it after a divorce.
"That probably means a $40,000 tax bill," Colton says.So, you might be better off selling your house before your divorce is finalized to take advantage of a hefty tax exemption.
6. Your insurance coverage
You'll likely have to update many of your insurance plans after a divorce, especially if you primarily received coverage from a spouse's plan.
The moment that your divorce is decreed, you are no longer eligible to use your spouse's health insurance, Kirilloff says. So, you'll need to get your own policy, which can be expensive.
Willardson also recommends purchasing a life insurance policy on the payer of alimony or child support, especially if you have young children, to ensure financial stability in case something happens to an ex-spouse that you are financially dependent upon.
One of CNBC Select's favorite life insurance companies is Northwestern Mutual. According to theNational Association of Insurance Commissioners (NAIC), it is the largest issuer of life insurance policies in the U.S., and the company offers a wide variety of life insurance products to best fit your circ*mstances. State Farm is another provider that customers rate highly and also offers life insurance policies that don't require a medical exam.
Northwestern Mutual Life Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
As the largest life insurer by market share in the U.S., Northwestern Mutual is an established choice with a proven record. And, it offers a number of types of policies across the country.
State Farm Life Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
State Farm offers a variety of term, whole, and universal life insurance products to choose from, alongside other types of insurance. It's rated highly for both financial stability and customer service.
7. Your court costs
Divorces that make it to a courtroom are extraordinarily expensive, says Kirilloff.If a courtroom divorce is unavoidable, get ready to deal with hefty fees. Divorcees who hire a full-scope divorce lawyer pay an average of $11,300 in attorneys' fees, according to a national survey by legal help service Nolo.
"I see those couples in court all the time, and if they don't get to the point where they get cooperative, then it's $100,000, $200,000, half a million dollars that just never comes back," says Hetrick. "They spent $200,000 fighting over assets that were worth $50,000."
One way to avoid the courtroom and save potentially tens of thousands of dollars in legal fees is to use a neutral, third-party service with certified financial advisors. Keep in mind that your lawyer is not your financial professional and can't give you financial advice. However, these analysts can help you and your spouse iron out an asset division plan outside of court. By doing this, you only need to pay an attorney to draft or certify the separation contract (in most states) instead of each party paying an attorney to barter over your joint financial assets for days or weeks on end.
If you still end up with a bill that's a lot more than you bargained for, you might consider taking out a personal loan to cover those fees. One of CNBC Select's favorite personal loans is from LightStream, the online lending arm of Truist Bank. LightStream Personal Loans offer low-interest loans with flexible terms for people with good credit or higher, and they deliver funds quickly.You can also apply for up to $100,000, making it ideal for those who require larger funding amounts.
LightStream Personal Loans
Annual Percentage Rate (APR)
6.99% - 25.49%* APR with AutoPay
Loan purpose
Debt consolidation, home improvement, auto financing, medical expenses, and others
Loan amounts
$5,000 to $100,000
Terms
24 to 144 months* dependent on loan purpose
Credit needed
Good
Origination fee
None
Early payoff penalty
None
Late fee
None
Terms apply. *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
Subscribe to the CNBC Select Newsletter!
Money matters —so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox.Sign up here.
Bottom line
The most financially simple divorces are done amicably, with empathetic communication between both parties.But no matter how messy your separation gets, you should still prepare for some common financial pain points.
Meet our experts
Amy Colton, a Certified Divorce Financial Analyst®, is the CEO and founder of Your Divorce Made Simple, a Texas-based financial solutions firm where she has guided individuals and couples through the division of assets since 2016.
Victoria Kirilloff, a Certified Divorce Financial Analyst®, is the founder of Divorce Analytics, a California-based financial solutions firm where she has helped her clients through data-driven divorce settlements since 2020.
Chad Willardson, a Certified Financial Fiduciary®, is the founder of Pacific Capital, a California-based wealth management firm where he has forensically guided wealthy clients through financial life stages like divorces since 2011.
Nancy Hetrick, a Certified Divorce Financial Analyst®, is the founder of Smarter Divorce Solutions, an Arizona-based financial solutions firm where she has helped individuals and couples through easy, profitable divorces since 2012.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every guide is based on rigorous reporting by our team of expert writers and editors with extensive knowledge. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we make recommendations.
Catch up on CNBC Select's in-depth coverage ofcredit cards,bankingandmoney, and follow us onTikTok,Facebook,InstagramandTwitterto stay up to date.
Read more
What you should do with your credit before a divorce
How I managed my finances after a divorce
Should you and your partner get a prenup?
How various retirement accounts are divided during a divorce
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.