Financial Impacts of Marriage & Divorce and How to Prepare for It

Financial Impacts of Marriage & Divorce and How to Prepare for It


The latest Department of Statistics Malaysia publication shows that marriage divorces increased by 12% in 2019. Despite the increasing numbers, it’s no secret that amicable and rough annulment of marriage impacts personal finances in many ways, namely a decreased net worth due to less income and more expenses. Preparation for divorce is more essential than ever to minimise the previously mentioned tolls on your mental and financial health, and you can start by reading on.

Understanding the Financial Implications of Marriage Divorce

When preparing for marriage divorce, it’s worth noting that you must be ready to divide your inheritances, tangible assets, retirement funds and debts with your spouse, primarily if you’ve used joint funds. Consequently, you have less money that you can keep. 

Furthermore, you must also consider how much alimony you’ll pay the non-working spouse as compensation and child support for your offspring. Lastly, divorce can also affect your tax brackets because you’ll live alone instead of with your spouse, making you pay more taxes than usual. The depleted funds may lower your credit score, making it more challenging to apply for financial services.

Steps to Prepare for Divorce Financially

To prepare and minimise the impact of marriage divorce on your finances, gather the necessary financial documents, such as the latest bank account statements for your savings, investment and retirement funds. Don’t just stop there because you must also compile a list of assets purchased during your marriage, credit card statements, and any loan ledgers you may have. 

Next, determine how much you need to spend monthly to live comfortably and gauge it based on your potential income source. Once you’ve organised all the required proofs, research all legal and financial advisors available to you since they will help you split the available assets and set your post-divorce financial goals.

Strategies to Protect Your Finances During Divorce

Even if you’re divorcing amicably, taking steps to protect your finances during the process is a wise decision. Start by establishing individual bank accounts and credit cards that will belong to you after the marriage divorce, and close any joint accounts you may have. Aside from opening bank accounts and applying for credit loans under your name, you can protect your credit score by updating all banking credentials to prevent unauthorised access. 

Then, remember to update your estate plan when you decide to move elsewhere and hand over any property to your children or someone else. Don’t be afraid to involve your lawyer or financial advisor to aid your financial transition process.

Managing Finances After Divorce

There’s no denying that marriage divorce can come with a loss of additional income sources, especially if your spouse has always been the breadwinner. Fret not, because you can prepare by creating a post-divorce budget detailing how much you should spend on essentials and wants according to your current income level. 

After that, prioritise settling any outstanding debts you may have during your marriage, which will help you rebuild your credit scores. You can compound your creditworthiness by paying bills punctually and getting a secured loan. 

As time passes, remember to revisit your financial goals to keep you on the right track, especially when saving money for rainy days or a significant milestone. This way, you can evaluate and adjust your savings and investment portfolio as you see fit.


Aside from taking a toll on your mental health, divorce may affect your credit score and financial security because you’ll undergo lengthy legal steps to divide your accrued assets, determine how much alimony and child support to pay, and potentially lose a source of income. 

Therefore, financial preparation for marriage divorce is crucial to help you live comfortably, especially when you have children to care for after parting ways with your spouse. Gather the necessary documents, and arm yourself with sufficient knowledge and a robust support network of experts to reestablish your credit score. This way, you’ll have an easier time starting anew after the rocky process.