I got married for the first time in my twenties. I thought we would be together forever. But within a few years, the marriage unraveled and I found myself going through a difficult divorce that was awful in all sorts of ways. But not knowing where all our money was, because I had let him be in charge of it? That was uniquely painful.
The happy ending is that I eventually met a great guy, got remarried, and had a couple of amazing kids. But my “starter marriage” is by no means an anomaly — national divorce rates are between 40 and 50%. And unfortunately, giving up financial control isn’t an anomaly either: One study found that 56% of women defer to their spouse on investment and financial planning decisions. And in a survey of 1,800 divorced women, 22% said they’d “relinquished all responsibility” for long-term finances while they’d been married.
No good. We can’t just let our partners handle our finances, even if the relationships are going swimmingly right now — this is central to financial feminism.
So if you’re reading this and thinking, “Thanks, Sallie, but I’m happily married or partnered” — great. This article’s definitely for you. And now’s the time to take stock of your financial life.
Steps to help you maintain your financial power
Have the money talk with your partner
It’s time to sit down and talk through the day-to-day stuff. You know — what you’re making and earning through investments, what you’re spending your income on, and your money goals. Our team recently created a guide to having those conversations.
It can be good to have these check-ins at least quarterly, or maybe monthly if that works better for you — the frequency isn’t as important as the regularity. Plus, good news: In one survey, 78% of couples who talk about money every week said they’re happy (while only 50% of couples who talk money “very infrequently” said they’re happy).
Take stock of each other’s accounts
At the very least, find out how much is in each of your individual checking, savings, and investing accounts. You’re also going to want to know the value of any other assets, like real estate or valuable collectibles.
Which of your accounts are joint — that is, held in both of your names? Are there any assets other than bank or investment accounts that you might be entitled to if you call it quits? Knowing the answers to these simple questions can save you from unpleasant surprises later on.
Create a list of beneficiary designations
If you’re married, it usually makes sense for you to be the beneficiary on one another’s wills, life insurance policies, and retirement accounts. Now’s a good time to take stock and see if any fell through the cracks.
An audit can also help you make a list of these accounts and designations so that you can quickly change them later if need be. (This is one of the most overlooked steps after a divorce.)
Consider a postnuptial agreement
In the event things do go south, there’s no one-size-fits-all solution for dividing assets. I’ve watched several friends go through this, only to be tripped up by the details.
Prenups — a contract written before your wedding day that dictates how your assets will be divided in the event you split up — were invented to help avoid this headache. So if you signed one of those, no need for this step. But if you didn’t and you’re already married, you can think about signing a postnup now.
(Just be careful: In certain states, postnuptial agreements are sometimes difficult to enforce. I recommend working with an attorney on this so that you can make sure all your bases are covered.)
Know your state’s laws
As I said above, it’s not as simple as “what’s yours is yours, what’s mine is mine, and we’ll divide everything else 50-50.” Things like the length of your marriage and the state you live in can alter the rules of the game a lot. In community property states, most assets you acquire while you’re married are split equally — but there are only nine of those states. In others, it may be up to a judge or mediator to help iron out the details.
Learn which assets are marital assets
Any account you build after marriage will be classified as a “marital asset.” So in a community property state, even if it’s their 401(k), you may be entitled to a portion of it, and vice versa. There are special rules about splitting IRAs and 401(k)s to avoid any withdrawal penalties. If you ever cross that bridge, it’s a great idea to consult an expert like an accountant or tax attorney.
Understand the pros and cons of what you could end up with
For example, one person might feel strongly about staying in a house you own together. Depending on where you are, the house might come with big ongoing expenses like taxes, insurance, and maintenance. It’s also possible the house won’t increase in value at a rate similar to the investments you might give up in lieu of the house (or vice versa). Plus, when you go to sell your house, it has different tax implications than an investment account.
Get the 411 on alimony and child support
In the absence of a prenup or postnup, requirements for alimony — aka ongoing payments from one spouse to the other — can vary greatly from state to state. Plus, if you have kids, a judge may award child support. Some states award alimony for life, while in others, it’s limited to a few years. States also vary on how long child support lasts, and how college and other education costs are handled.
Have a handle on what else might be in your corner
For example, if you’ve been hitched for at least 10 years and you get a divorce, you may be entitled to a spousal social security benefit. As long as you don’t re-marry and your ex’s benefit is higher, this could kick in as soon as age 62.
And if things are not so good...
The first, most obvious thing to do is get emotional and practical support from your family and friends. After that, taking steps to prepare financially should be at the top of your to-do list.
For example, if you’ve taken a career break, you may want to re-enter the workforce. If you’re already working, see about getting that raise. (Then invest the raise.) Research from the US Government Accountability Office has shown that women’s household income, on average, fell by 41% after a divorce. That's nearly double the loss that men experienced.
(If you’re looking at a potential divorce, I’ve written before with some recommendations for making sense of your finances. And I’m sorry. And you’ve got this.)
No matter where you are in your marriage, taking control of your finances is always a good call. Even if your partner does most of the planning, and you’re OK with that, you can still be in control if anything unexpected happens. (And if you’re ready for that ring to come off, well, there’s no better way to gain back your independence.)