The Effect of the Divorce on Families’ Financial Status

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Literature Review

Global divorce rates have been on the increase due to several factors affecting the couple. Different motives have been identified to cause divorce (Graaf & Kalmijn, 2006). It has been argued that the motives that were considered serious have recently become less important. Research indicates that divorce affects the financial well-being of families (Forgatch & DeGarmo, 2006). The reason for the economic distress is mostly due to changes in the structure.

As people divorce, there is the formation of two different households as opposed to a single household that characterized the married couple. For this reason, the same resources that used to cater to fixed costs such as housing and transportation would now be shared. This means that there would be an enormous financial strain as the resources are used to cover greater fixed costs. In addition to this, the process of divorce might be an expensive venture.

Costs may be incurred when paying the attendant to marital disruption. Such fees include legal fees. Significant legal fees are paid by the couple because they have to pay two legal teams. Some couples disagree and fight out of court. This proves to be even more expensive since custody battles over assets and other resources may cost the parties a lot of money. As the individuals relocate after the divorce, there could be substantial relocation fees.

Start-up fees may come in the form of down payments or rental fees for apartments. Transportation of items constitutes of moving costs. Costs are also incurred while trying to replace some of the assets that were lost to the other partner during a divorce. All these costs usually drain both parties financially (Vaus, Gray, Qu, & Stanton, 2014).

Apart from the cost of divorce, another financial burden comes about when dividing assets. Many states allow courts to determine how assets would be divided between the partners during divorce (Thomas, 2008). For example, the assets acquired during the marriage may be divided equally.

However, this might vary in other states. Another financial problem might be encountered during the division of debt. Married couples do not only share assets but also share debts. In the case of divorce, the partners would need to share costs. Depending on their earnings, one party might experience greater financial strain.

Sorensen and Hill (2004) agreed with the arguments made by Forgatch and DeGarmo and added that women and children are mostly affected financially after divorce. This is mainly due to the existing differences in earning power between the men and the women. It has been argued that husbands generally earn bigger salaries than those of their wives (Thomas, 2008).

When married, the man’s earnings may be shared almost equally between the parties. After divorce, however, the men might be unwilling to share the resources equally. Consequently, this leads to a dramatic reduction in resources available to the woman and her children. Even though the woman might be working, the lack of sufficient support from the man may lead to financial problems.

It is suggested that children and mothers suffer more than men do during separation (Vaus, Gray, Qu, & Stanton, 2014). This is mainly due to unequal wages for men and women. In addition to this, women have more expenses since they need to take care of their children. Some women may even fall into poverty due to divorce (Forgatch & DeGarmo, 2006). Some women who used to own a home may lose the house due to the circumstances.

More recently, studies have shown that the financial burden is greatest only during the first year when the woman can lose up to 77% of the wealth. The burden depends on how much the woman contributed before the divorce and how willing the man is to continue supporting the family.

After the first year, however, the woman can have a 14% increase in wealth annually. Compared to the 16% increase in wealth for married couples, it is evident that women and children can experience financial recovery after divorce. Divorce may significantly affect the woman’s income in the short run. However, the women can recover fully a few years after the divorce and become as financially stable as they would have been if they were not divorced (Vaus, Gray, Qu, & Stanton, 2014).

Generally, women try to recover by improving their earnings and by demanding support from their ex-husbands. Others seek opportunities for extension educators. Women may benefit from receiving tailored financial management education. This is usually provided in the transition to divorce. This education helps women gain effective financial management strategies. With this information, women can quickly recover from the costs incurred immediately after divorce (Forgatch & DeGarmo, 2006).

Married individuals without children tend to have slightly higher income before the divorce. After divorce, women with children would have less income. Those without children may increase labor supply since they would not have children that depend on them. Those who have children may remain at the same level for one year. The men might be affected less because they would not have to provide as they used to due to changes in family size.

Men might experience an increase in income. Two major factors may contribute to the financial loss experienced by the men. Firstly, if the wife used to contribute a substantial amount of income to the family, the man would experience reduced income. For this reason, he would need to struggle to make extra income. Secondly, the man might be required to continue supporting the child. For example, he could be required to pay for a separate home.

Additionally, fathers with shared custody of the children might experience greater financial constraints. Men who contribute less income to the family are likely to experience more financial problems than those who contribute more than 80%. Divorced men may experience a substantial increase in income after divorce (Vaus, Gray, Qu, & Stanton, 2014). They may be even better off than they would have been if they were not divorced. This clearly shows that women and children suffer more than men do during a divorce.

Due to financial constraints, women are likely to look for assistance from welfare programs. Intervention programs have been successful in providing financial aid to families after marital disruptions (Forgatch & DeGarmo, 2006). These programs have also been helpful in enriching children’s early education.

Parents also get an education to improve their parenting skills. Such programs help to reduce the financial stress associated with divorce. Welfare states may step in to improve the lives of families experiencing financial problems after divorce. Single parents can now receive additional child benefits. Other states also allow such parents to pay reduced rates in school programs and benefit from lower tax rates. With such support, many women can now raise their children without the help of their male partners.

The current study is significant because divorce is rampant in the current society. It would be important to assess the financial impact of divorce amidst the changing attitudes and perceptions towards the significance of the man in the family.

References

Forgatch, M., & DeGarmo, D. (2006). Accelerating recovery from poverty: Prevention effects for recently separated mothers. JEIBI, 4(4), 681-702.

Graaf, P., & Kalmijn, M. (2006). Divorce motive in a period of rising divorce: Evidence from a Dutch life history Survey. Journal of Family Issues, 27(1), 483-505.

Sorensen, E., & Hill, A. (2004). Single mothers and their child-support receipt – how well is child-support enforcement doing? Journal of Human Resources, 39(1), 135-154.

Thomas, O. (2008). Changes in the economic consequences of divorces. Family Law Quarterly, 43(3), 419-447.

Vaus, D., Gray, M., Qu, L., & Stanton, D. (2014). The economic consequences of divorce in Australia. International Journal of Law, Policy and the Family, 28(1), 26-47.

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The Effect of the Divorce on Families’ Financial Status

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