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divorce

Divorce - A real wealth hazard

Reading time: 1 - 2 minutes

Statistics show that the level of divorce in Australia is in excess of 50,000 divorces a year. Thats a THOUSAND A WEEK.

And apart from the problems, pressures, conflict and stress that comes with it, the wealth of those involved takes a big hit as well.

Not only does it see accumulated assets split (rarely 50/50 or particularly fairly) it puts weekly cash pressure on one or both of the divorcees.  Suddenly there are 2 lots of rent or 2 mortgages.  Unfortunately (but true) one or either parent spends more than they would otherwise on the children to curry their favour.  Some assets have to sold at "fire sale" prices just to generate cash, not getting the best return possible.  There are extra travel costs for visiting as well, just to pick a few added costs.

I'm not out to say people should never get divorced, because reality is some people should probably have never gotten married in the first place, and why live a life together if you're both miserable.  The argument that "we stay together for the kids" doesn't really wash either - it affects the kids more than some will realise or admit.

But to take a purely financial view, divorce will decimate the wealth creation and growth of those involved.  Apart from what Ive said above, theres also the legal fees that are getting flushed down the toilet too.

Thinking of real estate, divorce is like buying a house then giving it someone you don't like.   Not good for wealth creation.

So of all the ways you could blow your wealth to pieces and make for a hard road back, divorce is, in my view, the greatest wealth hazard we all face.

 

Please note that nothing in this post constitutes financial advice, and you should seek the advice of a professional licensed under AFSL regulations.

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