How Divorce Affects Money Habits

When I was 13, everything changed.

It wasn’t just my body or the deepening of my voice. Something else was happening, too: My parents were getting divorced. And for the first time in 15 years, my mother was returning to America’s workforce.

“I got a job today,” she told me one day after school.

That was a shocker. All my life, I had never seen her work, much less spend her own money. So when she reminded us to finish my homework that night, dropping hints that her master’s degree was the very thing keeping me fed and clothed, I had no doubt I would go to college.

I’ll never depend on any man, I thought. I want to support myself.

And like millions of other children whose parents got divorced, I began to discover that money and our values around it, for better or worse, play a pivotal role in shaping our financial lives. Whether we choose to become risk takers, compulsive shoppers or nervy hoarders, it’s all in the way we view things.

And while some beliefs may drive us to foster a career and invest, certain negative beliefs can hold us back and plunge us deeper into debt and despair.

Does divorce play a role in the way we spend and save? There isn’t much quantitative evidence out there, but many financial experts and psychologists feel that divorce does impact our money beliefs long after the settlement.

When Money Is a Problem

While researching her guide to the pitfalls of getting remarried, Every Single Girl’s Guide to Her Future Husband’s Last Divorce, author Adryenn Ashley noticed a trend: “With a lot of people I was interviewing, especially children of divorce, if scarcity was involved then they would have this need to contribute or save people,” she tells MainStreet. “They saw scarcity in their family, and so they were motivated to contribute to try and fix it. Rather than having a really well-rounded, calm relationship with money, it was seen as a problem that needed to be solved.”

This didn’t surprise Ashley, a certified divorce planner who was raised by a single mother on welfare. Her parents split up when she was young and she admits that watching her mother struggle to get by in California’s affluent Marin county motivated her to make headbands to sell at the ripe old age of 7.

“I said, ‘Oh, I can make these for 50 cents of materials and the dance shop will buy them for $5 and they’ll sell for $9. I wanted to make money and help. When everyone else got in a BMW or a Mercedes, I had to work and buy my own car,” Ashley says. 

Diane Mercer, a divorce attorney and author of Making Divorce Work, an eight-step guide to resolving family conflicts, agrees that these beliefs are common among post-divorce children. In fact, what Ashley experienced was the byproduct of what Mercer calls “bag lady syndrome,” the fear that “divorcees have that nothing is ever enough,” Mercer says.

“For the children, I’ve heard far too many stories of parents who worked two or three low-paying jobs just to make the rent, and as a result the kids were left unattended too much and either had to fend for themselves, or even fall prey to pedophiles.”

Children watching a parent struggle, especially if that parent’s a single mom, can become “hell bent on that not happening to their kids,” Mercer says. “Kids really respect these parents [rappers, football players and other kids being raised poor talk about it], but really don’t want to repeat the pattern.”

In this sense, then, divorce may instill children with the positive values of hard work, determination and education, but also stress about money. But as evidenced by Ashley’s mother, divorce often means hard times and/or a lingering resentment directed at the ex-spouse, who may have walked away with more money.

“When kids internalize money anxiety, it often makes them money worriers and money avoiders,” says Olivia Mellan, a psychotherapist and money coach whose books, including Overcoming Overspending and Money Psychology, deal with the psychology behind money conflicts.

“One client I worked with had a piggy bank and one day her mother didn’t have money and broke the bank to pay a workman. The daughter couldn’t stop crying and was completely traumatized,” says Mellan. Later as an adult this client “would spend the money right away before anyone could take it from her. Saving the money didn’t work. She was afraid to leave it around and make it grow.” In essence, she became a shopping addict.

“If instead of reacting out of fear, divorced parents took some time to do their budgets and carve out money for returning to school, or paying for a career counselor, I think that a lot of people would avoid the McJob [taking whatever job’s available just because it’s available] and find a career that would allow them to be engaged, interested, earn more and spend less time away from home,” Mercer says.

It might also help these parents avoid the common financial pitfalls that many divorced women fall into, notes Gabrielle Clemens, a certified divorce financial planner. “There was always the expectation that you would live better, with alimony and child support, upon getting divorced, but my [mostly] female clients aren’t living as well, especially the ones who got divorced five years ago.”

Clemens says the dynamics for single-parent households can be more stressful, because “with a two-parent family, the money is coming into one house and the money’s going to support one household, so the money’s left over for other priorities. [Unlike in a divorced household], you’re not forced to put money away. You don’t get bills to support your children every month.”

Money as Therapy

If divorce can cause scarcity, then how might it impact the children getting constantly showered with gifts?

“In these situations, I think the impact on children are that the divorces tend to be higher conflict,” says Mercer. Particularly in marriages where one parent is seeking retribution, perhaps after having been cheated on, or feeling used, “parents send the message that one or both parents are ‘spoiled’ so it’s OK for a child to be spoiled, too, and entitled to things just based on nepotism."

Of course the problem with this situation is that the child doesn’t receive “a good role model of how to deal with life’s curveballs” and “the retribution aspect often prolongs the conflict,” says Mercer. What’s more, these spouses tend to “burn through their settlements quickly, or think that the perfect new spouse [i.e. a rich one] or high-paying job will just fall into their laps.”

The takeaway for children, especially young girls, might be to eventually earn what my mom used to call an “M-R-S degree,” or as Clemens notes, to “bank on their inheritance.”

These beliefs also border on another quality Mercer typically sees among divorcees: naiveté.

“I think for kids the naïve parent is actually the most dangerous because they can put the kids in actual peril,” Mercer says. “They try to maintain the charade of ‘we’re fine’ for the kids, but it can’t last. Kids feel sorry for these parents and sometimes become aligned with that parent. I had a former client’s adult child call and tell me how his dad burned his mom by giving her the gigantic, fancy house, which fell into disrepair. But in truth what probably should have happened was that Mom should have gotten real and sold the house … instead of holding onto the house ‘for the kids.’ Naïve parents don’t demonstrate responsible money management, and kids think that money is mysterious, just as it is to at least one of their parents.”

Two Worlds

Elizabeth Marquardt, author of Between Two Worlds: The Inner Lives of Children of Divorce, knows first-hand that post-divorce children internalize money beliefs in myriad ways. “They’re caught between two different worlds,” she tells MainStreet. “The children of divorce that I studied … felt like ‘Dad has his money and Mom had her money, but where did I belong?’ You have to grow up too soon and take care of yourself, and often others before you’re ready to do it. When you take things on too soon, you don’t feel like you can master them. Especially money.”

During her research, Marquardt found that besides lacking confidence that “good things or relationships would last,” post-divorce children also held opposing ideas about money due to growing up in households with conflicting money beliefs. While Dad may have lost his job and sought retribution from his no-good ex-wife, perhaps Mom was feasting on grapes aboard the private yacht with her second husband.

“When the parents are divorced, that polarization can be more intense,” Mellan agrees. “If the child is deeply emotionally affected, they’ll have an emotional relationship with money.”

Sometimes a child identifies more with a certain parent over another, despite both parents' conflicting beliefs. In fact, such differences “might make it easier for you to choose one parent over another,” Mellan says, because the thinking is, “I’d like to be like my father, he spends lots of money,” rather than Mom, who never makes rent.


“So much depends on when the parents divorce and what happens in between,” says Constance Ahrons, a family therapist who headed the marriage and family doctor training program at the University of Southern California for 20 years. “The impact is different if they’re young because the remarriage rate is so high that parent is likely to remarry. Where it gets very difficult is during the teen years. Financially, they know what’s going on and frequently it changes their lifestyle.”

Ahrons, whose book, The Good Divorce, empowers families to remain intact post-settlement, has long argued that not every divorce has to bring about negative repercussions for the children.

“Divorce is not the only crisis kids will experience,” Ahrons says. “It’s a difficult family change, but it’s not the only one they go through. And there are all different kinds of divorces. You can’t just say [it’s the divorce] when talking about spending habits. It’s not the divorce that hurt the kids, it’s how you divorced, not that you divorced.”

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