My divorce made me realise how financially exposed I was

We speak to a Money Matters subscriber about her experience of divorce, and the financial challenges it posed.

Relationships often involve shared finances. This can be a healthy and advantageous thing all round. But it can also push one partner into the background when it comes to understanding exactly what’s going on with the household budget.

Almost one in five women surveyed as part of AJ Bell’s Money Matters campaign said their partner made most of their investment decisions. With men, the figure is just 6%. And it’s a situation that can cause problems, particularly if the relationship breaks down. One Money Matters subscriber, Helen (not her real name), got in touch with me to share her story of divorce, which ultimately saw her regain her footing and rekindle her love of investing – but not before she had to fight for her financial rights.

Divorce is never easy. But some divorces are more acrimonious and debilitating than others. Helen still remembers how normal it felt to give up her financial independence. She was in love, her partner was the main breadwinner, and she felt ready to start a family. ‘I just put all my chips in, I was completely committed to my relationship,’ Helen says. ‘My ex was very successful, so when we split the household chores, we said, okay you’re the banker and so I’ll run the home and raise our child. It’s funny because as a child my parents always taught me about investment from an early age and my mother had always said to me “keep your independence, it’s very important to have your own money”. Even with all that, it seemed to make sense. I just went with it. Big mistake.’

For more than a decade, life and the marriage was good. But then things went wrong. Helen became aware that her husband had started an affair and was making plans to file for divorce. ‘I went to see a solicitor, and the solicitor said to me “what’s your net worth,” to which I said “I don’t know,”’ Helen says. ‘He then said “well, where are the bank accounts?” and I had no clue. And so, I had to suddenly do an audit of the home finances to find out what the situation was before things could go missing. That’s the game in a divorce. Money just went into black holes and we couldn’t piece together what had gone on and where it had gone.’

But the biggest hurdle Helen had to overcome was paying the huge legal fees she was racking up. ‘All of that had to be done in cash,’ Helen says, ‘and they felt so sorry for me. Luckily, we’ve changed from a cash economy now, but in those days, we had nannies and things and they used to be paid in cash, and we had a cleaner and they used to be paid in cash and it was normal for me to be taking out quite a lot of cash and spending it on taxi fares to and from ballet lessons and things like that. So luckily, I had enough of a cash float. And my solicitor was also very kind, because you have to make a deposit when you appoint a solicitor, and they took a lesser deposit from me because they felt so sorry for me.’

Some divorced women discover they’re financially invisible when they try to restart their lives and have no credit history. But Helen’s saving grace came courtesy of some buy-to-let apartments she’d bought prior to and during her marriage. She couldn’t apply for help with her legal fees because she had a large amount of cash tied up in ISAs, which she didn’t want to cash in because of the tax benefits they provide. Instead, she managed to sell off one of her properties to cover the costs, but she recalls the stress of trying keep things normal for her daughter while making sure she protected her financial future.

However, when the settlement was finally signed off, it brought new challenges. ‘There’s this day where it’s signed, and things happen, and assets actually come over to you and then it’s terrifying,’ Helen recalls. ‘I was completely terrified, because for years I hadn’t been the one speaking to bankers, to investment people, dealing with pensions, making the investment into ISAs or SIPPs – any of that stuff. I felt completely embarrassed because I felt like a little child, and many of the advisers were male and said, “don’t worry, we can look after you,” and I found it awful. I was completely terrified about having the control and about losing the money.’

Soon, Helen realised she needed to develop a more active role in her financial planning. ‘I learned by reading the Sunday papers. I completely love it, it’s like a part of me has come back to life. Now I’m genuinely fascinated – I find the markets really, really interesting.’

But the experience has taken a toll and left scars. ‘I have a daughter and I would teach her never to become dependent on someone,’ she says. ‘It’s hard, I can imagine being in a relationship again going forward, but I can’t imagine splitting bank accounts or going all-in with my finances in a relationship. We live and learn.’