Top Five Ways Financial Problems Lead to Divorce
Money might not buy happiness, but it can reduce anxiety and there are several ways that financial problems lead to divorce. When young couples marry, they plan for the future of financial gain. As middle-aged and older couples decide to walk down the aisle, they may be concerned about preserving accumulated wealth. Money is a common factor in divorce, and while it might not be the only reason people call it quits, financial security is important.
Nobody says they want to fail at managing money but there are red flags. People who are always worried about money, carry huge debt without a large salary and spend money on luxury items they cannot afford can be a problem. Those behind on mortgage and student loan debt who seem to have the money for a premium vehicle may have poor money management skills, an indicator why financial problems lead to divorce.
How we were taught to manage money growing up and as young adults can set us in a good or bad financial path as we get older. While everyone can change, there are some financial behaviors that tend to stick with people and cause the financial problems that can lead to divorce.
- Household Debt Exceeding Disposable Income
It does not take very long to establish credit and use it to furnish your lifestyle. Whether you can afford your lifestyle might be another story. Some people cannot pace themselves and will use their available credit lines and revolving credit accounts until the cards are maxed out. Making only the minimum payments is dangerous because that debt will continue to grow. If your family relies on a fixed monthly income from salaries, it can be hard to get out of debt and get ahead.
Income from self-employed business owners can be speculative and irregular. That can lead to a reliance on credit cards and lines of credit. When the next big client or sale does not produce, some families live on their credit cards and pay them down when money comes in. The anxiety of never knowing your income is stressful. At some point, your spouse may reach their limit.
- Failing Investments and Amateur Investing
Investing disposable income in long-term stocks, bonds and funds is a good idea for long-term security and planning for retirement. When experienced and trusted professionals are investing and managing your family?s money, you may be better insulated from market fluctuations. Depending on your ages, a proper investment strategy can account for the appropriate balance of risk and gain. That said, there is always a risk of losing a significant amount of your net worth.
On the other side of the investment coin is the amateur investor with online trading accounts. The ease of investing on your own and day trading is something that has made many people a good amount of money. The cult of the amateur however, has broken some people who lost more than they could afford to lose. A well-educated high-income earner is not always a wise financial investor. Panic can set in during sell-offs and people can lose it all. Failed investments certainly are a factor leading to divorces.
Read our article, Investment Valuation for Texas Divorces.
- Shopping and Spending Out of Control
Managing your family?s image can be expensive. Looking like you are making it in business can be expensive. Having kids can be extremely expensive. It can be difficult to really know what you can afford and trick yourself into thinking you can afford more than you should spend. When the spouse earning, less income spends the other?s income in excess there can be feelings of anger, resentment and jealousy. Financial problems lead to divorce.
Out of control spending that leads to anger, fights and divorce can also be a result of spending money on other people such as a paramour. Especially among high income earners it can be easy to divert money without the other spouse noticing. A little here and a little there can lead to a significant amount of money that could be better used in the family?s best interests.
Read our article, Maintaining Your Lifestyle After Divorce.
- Gambling and Betting Addiction
Addiction itself can be a leading cause of divorce among couples where one or both spouses has a problem with abuse and addiction. Abuse and addiction are not limited to drugs and alcohol, gambling is also a significant problem leading to divorce. People who study how to win at cards and gambling games, or betting on sports teams and events, can get out of control.
If lack of security is a concern in a family, a gambling problem can lead to divorce when the other spouse reaches their breaking point. Regardless of how much money the family has, losing money gambling and having nothing to show for it is wasteful. When there are still mortgages, credit card debts and student loans for parents and children, it is tough to justify gambling. This is a common fight among spouses of gambling addicts.
- Low Credit Score and Inability to Borrow Money
The people with maxed out credit cards are hurting their credit score when they are using too much of their available credit. Especially when credit card companies continue giving people higher credit limits it is easy to use all the available credit. For example, credit cards offering initially lower interest rates and balance transfers to pay off cards at higher rates, can easily be maxed out which affects credit scores.
Getting mad at utility and service providers and not paying the balances off can also hurt credit. Regardless of income, stiffing a cell phone provider or car lease can come back to hurt you. Collection activity can quickly damage credit scores and when the interest rates drop, and you can not qualify to refinance a mortgage, you may be in trouble at home.
Over Time, Financial Problems Weigh Heavily on a Family
Financial problems lead to divorce, and while no single event or factor on this list is a sure predictor of divorce, the cumulative failure to manage money leads to anxiety and uncertainty, of which people can take just so much. When asked why they chose to get a divorce, many might say it is not the amount of money someone has that matters, it is how responsible they are with managing income and wealth that matters.
Mark L. Scroggins is Board-Certified in family law in Texas and he sees first hand how money leads to unhappiness and over time, divorce. There are many ways financial problems lead to divorce and the team at Scroggins Law Group in Dallas can help when you call them at (214) 469-3100.