The cost of divorce: unhealthy spending, retirement ‘bleak’, huge benefit and court costs

We know that divorce – the unsettling reality for one in three marriages – usually has an immense but largely immeasurable emotional impact on couples and their children.

But the financial costs can be quantified – and a detailed recent report by the National Centre for Social and Economic Modelling for AMP (called Divorce: For Richer, For Poorer) shows a $14 billion cost to “the nation [in] government assistance payments and court costs”, up $2 billion from 2012.

Closer to home, divorce means financial stress increases for divorced families in almost every area.

“Divorce has a significant impact on families’ financial wellbeing, whether they have children or not, both in the short and medium term,” the report found. “While most families start to recover economically five years post-divorce, there remains a significant gap [20 per cent] in the financial well-being of divorced and married couples even five years later.”

The report found the median age of divorce for men was 45.3 years and women 42.7 years. It claimed divorce typically occurs during “couples’ prime wealth accumulation and child-rearing years”.

The division of assets caused the greatest financial damage, the report concluded, with retirement looking “bleak” for divorced couples because “super balances for divorced women are 70 per cent less than married women, and 28 per cent lower for divorced men compared with married men.”
“A divorced parent aged less than 45 years has 35 per cent less assets than a married respondent of the same age, while a divorced parent aged 45–64 years has assets valued at only 25 per cent of those of a married parent from a similar socio-economic background.”

In the short to medium term there were big differences in day to day expenses that could conceivably set up problems for years.

Household expenditure changed significantly before and after divorce, with the biggest differences experienced 1 to 4 years out from divorce. For divorced men and women with dependent children, spending on items such as groceries, utilities, meals eaten out and alcohol and cigarettes increased, while money spent on clothing and footwear, repairs, maintenance and insurance dropped. The changes remained five years and more after divorce, although the disparities had eased.

The proportion of a divorced mother’s total income spent on groceries climbed 27 per cent between 1 and 4 years after divorce, while the share of their incomes spent on utilities rose nearly 47 per cent. Their spending on health and medicines fell, while five years after divorce they were spending 45 per cent more on alcohol and tobacco.

Divorced fathers with dependent children increased their spending on education by 39 per cent inside the first 4 years of divorce. “This may reflect fathers having been the main income earner in the family and that paying for their children’s education is their main source of child support,” the report found. But divorced dads’ spending on also alcohol and tobacco by 53 per cent inside the first four years. Their grocery spending rose by nine per cent.

The report found: “Divorced mothers are more likely to experience financial stress than divorced fathers or couple families … One in five newly divorced mothers report they can’t afford spending on the kids such as school clothing, leisure activities, or school trips for their children. This compares with only one in 50 newly divorced fathers.”

This may be related to the one area fathers benefited from after divorce: income. “The income of a divorced father is 26 per cent higher than the income of a … married father. This may reflect increased job mobility in terms of location and type of work as well as an increased ability to accept higher paying work.”

The employment rate is also higher for divorced fathers than married dads five years after the divorce.

The report also claimed education outcomes for children from divorced families are slightly worse than for those families whose parents remained married. “Family breakdown increases a child’s chance of being an early school leaver (i.e. doesn’t complete year 12) by 6 per cent [and] decreases their likelihood of getting a tertiary education also by 6 per cent compared with children whose parents were married when they were 14 years of age.”

The  data came from the Australian Federal Government’s Household Income and Labour Dynamics Australia (HILDA) report conducted between 2001 and 2016, which was managed by The Melbourne Institute of Applied Economic and Social Research at the University of Melbourne.

Using mindfulness practice helps reduce financial stress and strain

The word ‘mindfulness’ seems to be everywhere these days

Mindfulness stress-reduction programs are fast becoming a solid plank in corporate wellness strategies.

Mindfulness programs, run by external trainers and delivered in-house to stressed-out employees are in steady demand as employers seek to curtail the impacts of a big range of lifestyle and mental health issues that lead to costly absenteeism and its sneakier sibling, presenteeism.

And unlike some gimmicky offerings to staff, employees notice the benefits; mindfulness programs are the new gym-at-work, if you will.

There is little doubt mindfulness practices – which range from yoga to tai chi and the most popular recently, mindfulness meditation – work.

Researchers for the American Psychological Association, Daphne Davis and Jeffrey Hayes, found many clear benefits from a broad review of prior research into mindfulness. Davis’s and Hayes’ 2012 practice review What Are the Benefits of Mindfulness? A Practice Review of Psychotherapy-Related Research, reported a multitude of benefits.

Among them, that mindfulness “decreases rumination” (or ‘over-thinking’), improves memory, reduces anxiety and depression symptoms. People who did mindfulness meditations in studies became “less reactive” and more flexible in their thinking. They were found to be better at “self-observation” and could adapt better to “stressful and negative situations” and concentrate better after receiving “upsetting stimuli”.

But the issues that worry us enough to interrupt people work and sleep are so mind-bogglingly varied that general, one-size-fits-all mindfulness programs could easily frustrate us if the results aren’t apparent where we need them. Mindfulness practices tend to inch us towards become more mindful across every area of life. Might it make more sense to apply targeted mindfulness practice to one or two areas of life? Maybe the ones that stress you out the most?

Think about that: don’t we need distinct a mindset to resolve relationship issues, compared to say, problem-solving our career stagnation? Can you compare the kind of focus needed in finding the calm and patience to cope with a major health scare or crisis with to the action needed to reign in our ballooning credit card debts?

One of the biggest issues stressing out employees in the US and in Australia is something not often associated with mindfulness meditation: personal finances.

The American Psychological Association’s 2015 Stress in American Survey, of 3,068 adults, found 64 per cent considered money “a somewhat or very significant source of stress”. More than one in five people “experienced extreme stress about money” during the month they were polled.

“Regardless of the economic climate, money and finances have remained the top stressor since our survey began in 2007 … this year’s survey shows that stress related to financial issues could have a significant impact on Americans’ health and well-being,” said APA CEO Norman B. Anderson.

In Australia, the picture is similar. AMP’s 2016 Financial Wellness report found “one in four” workers were financially stressed and the company estimated that cost A$47 billion a year in lost revenue.

“It’s important we find ways to address levels of financial stress in the workplace,” said Vicky Doyle, AMP’s Director Corporate Superannuation.
While the solution Doyle posited was financial goal-setting, given the amount of distress and discomfort money causes us, could there be other answers too? What if mindfulness practice could change not only the way we view our money problems, but lead us to concrete actions that solve some of them?

Tomas Jajesnica, Chief Mindfulness Officer at Financial Mindfulness, says mindfulness practice can help with obvious (but hard-to-control) problems like overspending in two ways. The first is to help you stop re-living the kind of fantasy in which it’s somehow okay to continue living beyond your means.

“You become more aware of the situation not as you want it to be, but as it really is,” Jajesnica says. “The second thing it does is create equanimity, or a balanced mind, so you can deal with the ups and downs of life. Then you are better equipped to deal with whatever situations you face, with calm focus and clarity.”

So mindfulness may not directly improve your financial circumstances, at least not straight away, but it is capable of quickly reducing the pressure you feel about money – which is by definition your sense of financial stress.
Jajesnica, who is also a corporate-based mindfulness trainer and meditation teacher, says practising techniques like meditation can go further too, putting you in a frame of mind to find solutions to stubborn problems with their personal finances.

“Most people from when they wake up to when their head hits the pillow mind are constantly switched on, moving from task to task to task all day long. When the mind is constantly switched on, it’s inevitable stress will occur.

“Mindfulness this is a maintenance tool to help develop clarity of thought to create space in the mind for new ideas and innovations.”

Under-Earning: The shameful side of the financial stress puzzle

When it comes to the subject of ‘financial stress’ a lot of energy and attention is paid to our spending: where does all our money go, we are urged to ask of ourselves and our partners.

The insinuation is that we share a horrible flaw: reckless and clueless impulse spending. That we are over-spenders, who at best use money to still difficult emotions and at worst cannot control our greedy desires.

For some people, sadly, those are uncomfortable truths. But just as many people try with all their willpower and attention to detail to live within their means but cannot seem to make ends meet. For many of them the opposite problem to over-spending applies: under-earning.

Earning less than your skills suggest you should wouldn’t be a problem if it wasn’t so damn expensive to live; so huge numbers of people are driven into debt.

US households on average carry US$132,529 (A$172,326) in debt, according to American financial advice website In Australia the figure is even higher, skyrocketing to A$245,000, according to the National Centre for Social and Economic Modelling (NATSEM). Much of those debts are mortgage repayments, an essential cost and also an investment in our futures. So unavoidable.

But what about credit card debt? In the US, the average credit card debt per household is US$16,061 in (nearly A$21,000), according to nerdwallet’s 2016 American household credit card debt study. Card debt is lower in Australia, but still over A$4362 per cardholder.

“Many people assume that credit card debt is the result of reckless spending and think that to get out of debt, people need to stop buying designer clothes and eating at five-star restaurants,” says Erin El Issa, author of the report.

That is often untrue. “Many people use credit cards to cover necessities when their income just doesn’t cut it,” El Issa wrote.

Nerdwallet found US household debt had increased 11 per cent in the past decade – mainly because growth in the cost of living had outpaced growth in wages: “Median household income has grown 28% since 2003, but expenses have outpaced it significantly. Medical costs increased by 57% and food and beverage prices by 36% in that same span.”

One answer to how we cope with going backwards even when we have the best of intentions is to confront the issue raised near the start of this article: under-earning.

But beyond a state most of us find difficult, even shameful to talk about, what is under-earning, exactly?

First it’s useful to identify what under-earning is not. Barbara Stanny, author of Overcoming Underearning: A Five Step Plan for a Richer Life wrote in Forbes in 2011 that an under-earner is not someone who chooses a low income, or a simpler life without much work. “It is always a CONDITION OF DEPRIVATION [sic] not just of money, but of time, joy, freedom, choices and self-esteem,” Stanny wrote.

Under-earners are often drowning in debt and vague about money, she wrote. They might even have an “anti-money attitude”, unwittingly sabotage their own career prospects and underestimate their value at work.

Often they are also co-dependent (meaning they put others’ needs ahead of their own).

Under-earning is a chronic condition that’s not going to be fixed in a day, let alone by reading an article, but awareness of it can start to break decades-long negative cycles. People work through deep-seated issues like these using anything from various forms of therapy to 12 step recovery to mindfulness practice.

The latter approach can help alleviate financial stresses and strains at two levels. “Mindfulness practice won’t necessarily change your earnings,” says Tomas Jajesnica, Chief Mindfulness Officer at Financial Mindfulness and a corporate-based mindfulness trainer and meditation teacher.

“But it will give you a new awareness of what you are doing and help change your approach to what and how you spend and what you earn.”

Jajesnica says regular mindfulness practice will help people clearly see the reality of their situation, “instead of being stuck … with your mind racing 100 miles an hour” – and will give you the calm to deal with it. And you’ll need that calmness because negative, even painful, feelings are likely to come out of seeing the realities behind your financial stress.

“Frustration can be sign of a breakthrough,” Jajesnica says.

“It might help you get into action, perhaps seeking a pay rise, having an authentic conversation with your boss or it might put you into gear to pursue a better-paid vocation, either within the same company, the same industry or by doing something totally new.

“Either way, if you change your relationship towards money by first accepting the reality as it is, is a great start to this process.”

Financial wellness eluding Americans: could mindfulness help?

Financial stress is rife in the western world, perhaps no more so anywhere than the United States.

In 2015 the American Psychological Association released research from interviews with 3,068 Americans showing 72 per cent of them “reported feeling stressed about money at least some of the time during the past month”. For a big majority (64 per cent) money was a “somewhat or very significant source of stress”.

APA CEO Norman Anderson said “Regardless of the economic climate, money and finances have remained the top stressor since our survey began in 2007.”
Many Americans do have the capacity to change this situation but do not. Why is that?

Consumer culture and bad spending decisions are often to blame for people who can afford to but fail to secure their future, according to the American Institute for Economic Research.

“In the key metrics of financial wellness, including short–term emergency savings, investment, and indebtedness, many Americans fall short,” wrote Max Gulker, senior research fellow with the AIER, in an article published in January 2017.

In the United States, 20 per cent of income is the widely accepted portion of income that should be set aside for meeting financial goals. These include paying credit card debt (the average American household credit card debt is US$16,061), repaying student loans (the average for graduating students in 2016 was US$37,172), saving for retirement and a separate pot to pay for emergency expenses.

Two months’ worth of income is the smallest accepted amount of income suggested for an ‘emergency fund’.

“Almost half of Americans can afford to invest and hold adequate liquid savings,” Gulker wrote. “[But that] does not appear to be the case. The median saver among those earning US$85,000 is still only holding 40 days of work income in savings, well short of commonly cited goals.”

Most Americans, Gulker found, either cannot meet these financial goals – or won’t.

His research showed that many people simply cannot afford to save much – if anything – once essentials (housing, food, transport, health care and miscellaneous – likely including clothing and footwear) and so–called “lifestyle” costs are paid for. Eating out and taking holidays were not included in his calculations. His research looked at what a 30 year on the median income of US$35,613 would have left for “lifestyle” after paying for essentials and putting aside that 20 per cent to achieve financial wellness. The answer was just $4 a month, meaning many people on average incomes are having to choose between lifestyle and financial wellness.

Gulker speculated some Americans on higher incomes, “who can afford to save and invest enough [would have] rational motives” for not doing so – like expectation their incomes might rise, or family wealth to turn to. But many personal behaviours that prioritise “immediate [over] delayed gratification, are rife with potential human biases and errors,” he wrote.

In other words, people who can afford to secure their future, but don’t because they don’t want to miss out on anything, are probably getting their priorities wrong.

Gulker doesn’t believe most people are reckless though. He sees pressure to spend in the consumer society of 2017 as an irresistible force for many people.

“In an age of microwaves and convenience stores, instant gratification is at our fingertips, and we end up consuming too much. From food to electronics and cars to homes, we’ve witnessed an explosion in the amount and variety of consumer products available. At the same time, shopping is faster and easier than ever before due to the internet and ease of transportation.

“Finally, our financial system has made borrowing and credit easier for consumers across the socioeconomic spectrum.”

Gulker’s made no endorsement of mindfulness – his brief was not to suggest solutions to these problems. But it’s highly likely that mindfulness – which has been proven to reduce stress – around our decision–making with money could make a big difference to our ability to meet our long–term and short–term needs.

Peter Vincent

Huge numbers of Australians won’t be able to afford a comfortable retirement

A huge 47 per cent of Australians between 26 and 64 – 6.1 million people – are not likely to have enough money, even accounting for superannuation, assets and the aged pension, to maintain a “comfortable standard of living” in retirement. That’s according to CommBank’s ‘Retire Ready Index’, which is compiled using data from 10 million Australians’ superannuation accounts and Australian Bureau of Statistics’ data on personal wealth.

On the flip-side, 53 per cent of people in the same age bracket should have enough for a comfortable retirement, although that figure drops alarmingly to just 17 per cent if the aged pension were not available. Although there are no signs the aged pension is under threat, there are fears about its long-term sustainability, especially after then-assistant Australian Federal treasurer Kelly O’Dwyer claimed in 2016 that the “objective behind the superannuation system” was for people to not rely on the pension.

The pricetag for a “comfortable” retirement, according to figures released last September by the Association of Superannuation Funds of Australia, is $43,372 a year for singles and $59,619 for couples. Having enough money to budget these amounts each year from age 67 (from 2023 that will be the age at which Australians qualify for the pension) until death is what it means to be “ready” for a comfortable retirement. The calculations use average life expectancy.

ASFA said this “comfortable” standard would afford: “a broad range of leisure and recreational activities [and] a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel”.

A “modest” retirement could be attained with $23,996 a year for singles and $34,560 for couples. No further details were offered on what a ‘modest’ retirement meant, but one might guess it means choices would have to be made between holidays of any kind, a car and/or a low level of health insurance.

Overall, one in two households expect to be ready for retirement – but by far the strongest households in this sense are those run by couples. While only 27 per cent of singles are on track to be ready, 76 per cent of couples expect to be ready.

Breaking down singles’ retirement readiness by gender reveals some major concerns for women: because of lower incomes, time lost from their careers to raise children and longer life expectancies, only 22 per cent of single women are expected to be ready for retirement at 67, while the figure is 31 per cent for single men.

It’s a given that mindless spending habits including impulse spending – which happens when people are feeling anger, guilt, stress or boredom – are affecting people’s ability to save enough for retirement. A mindful approach to all personal finance issues, especially over-spending and under-earning, is gaining momentum as a solution.

Australian employees want mental health at work taken seriously

Australian employers don’t understand their employees’ major life concerns, according to a study of 500 workers and 300 bosses released in November 2016.

Insurance company Metlife’s  Employee Benefit Trends Study found that Australian bosses dramatically underestimated the importance of staff concerns about mental health issues like depression, anxiety, stress and work-life balance while overestimating fears about physical health.

Financial stress played a big part in employees’ worries. A huge 41 per cent of employees admitted being distracted at work because of financial worries, while 31 per cent admitted having taken time off work to deal with “a financial issue”.

“This highlights a need for employers to step in with professional support and education to help boost their staff’s financial literacy, giving them peace of mind about their future security,” the report concluded.

The top five financial worries for staff were: job security, and not having enough money to live comfortably in retirement (both 55 per cent); having more time with my family, and financial security for my family if I’m not able to work (both 53 per cent); being able to cover medical expenses from a major illness (52 per cent).

Employers were asked what they believed their employees’ major health fears were and 88 per cent thought medical problems would top the list, with emotional problems identified by 69 per cent of employers.

Only six per cent of business managers nominated depression and anxiety as an issue, while 11 per cent identified stress and nine per cent believed work-life balance was a big issue.
Employee’s actual health concerns were the other way around however: 84 per cent mentioned emotional wellbeing, and 70 per cent named medical issues.

Depression, anxiety and stress were much bigger issues for employees than managers realised: 38 per cent of staff mentioned work/life balance, nearly a third (32 per cent) said depression and anxiety were major concerns and 29 per cent nominated stress.

The study conclusions included the claim employers could “win hearts and minds by encouraging emotional and financial wellness”. Employers could “enhance employees’ ability to take control of their financial wellness by offering professional support and education”.

Metlife’s research also found employees were prepared to split the cost of customised benefits programs, including: medical or health insurance, flexible work arrangements, income protection, employee awards and incentives, and health and wellness programs.

Financial Stress could harm unborn children

Being under financial stress is bad enough for adults, but there’s new evidence to suggest money worries could harm us before we are even born.

Research done by Amanda Mitchell and Lisa Christian from The Ohio State University, which was published in the Archives of Womens Mental Health journal in December 2016, has found a correlation between “financial strain” and low birth weights in new born babies.

Being born under-weight has been associated with disease in later life including obesity, diabetes, heart disease and high blood pressure.

Mitchell and Christian found: “pregnancy-specific distress and depressive symptoms, but not perceived stress or general anxiety, serve as mediators in the relationship between financial strain and birth weight in pregnant women.” In other words, financial stress increases depressive symptoms and pregnancy-specific distress (but not general anxiety) which in turn, is associated with lower birth weight.

It was already known that financial strain has “significant mental and physical health effects” and “contributes to adverse health outcomes in women, such as increased oxidative stress levels, greater malnutrition risk, lower self-rated health, and recurrent coronary events”. It was also known that financial strain can lead to depression in women before and after the birth of a child.

But this research is believed to be the first time the link between money stress and birth weight has been proven.

The study followed the progress of 138 women in Ohio throughout their pregnancy. Eighty-five per cent of respondents were married or in a relationship, 59 per cent had complete a college (or university) degree or higher and 67 per cent were employed. Half earned at least $50,000 a year and while the biggest group earned less than $15,000 a year, the next biggest made over $100,000 a year.

Women who used illicit drugs, consumed more than two drinks a week, had foetal abnormalities or more than one foetus or were extremely obese were excluded.

It established the women’s levels financial strain from three questions: “How difficult is it for you to live on your total household income right now?”; “In the next two months, how likely is it that you and your family will experience actual hardships, such as inadequate housing, food, or medical attention?” and “How likely is it that you and your family will have to reduce your standard of living to the bare necessities in life?”

Mitchell and Christian suggested further research was needed to see how measures used to reduce “pregnancy-specific distress” could change the relationship between financial strain and low birth weights.

Single Women Leading Men in US Home Ownership

The latest research into women’s struggles with money, Mary Pilon of US business website Bloomberg notes, can make for dreary news.

“Women earn less than their male counterparts, pay harsher workplace penalties for pursuing parenthood, struggle more with debt, and save less for retirement,” Pilon wrote of the situation in the United States, although she could easily have been writing about Australia.

Crucially, women also lose years from their careers by raising children, they do mountains of unpaid (and often unappreciated) domestic work and to top it all off – when facing financial strain – often give birth to under-weight babies.

Many also still face nagging historical stereotypes that women can’t manage money – despite evidence showing women shoulder more financial decision-making and responsibility in families, marriages and relationships than ever before. Sound like a recipe for financial stress?

Forget ‘dreary’ – the news about women and money can be downright depressing.

But according to new research from the National Association of Realtors, single women in the US are leaving single men in the dust for home ownership compared to single men.

The NAR says 17 per cent of American homebuyers are single women compared to single men, who make up just 7 per cent of the market.

Pilon spoke to “30-something” Michelle Jackson who bought a one bedroom apartment in Denver in 2007 which she plans to renovate and is even considering buying a second property.

“I’m so happy,” Jackson said. “It’s completely changed how I feel connected to the place where I’m living. It’s one of the best things I’ve ever done.”

Jackson’s motivation could easily echo the story of many Australian women: “I wanted to have my own place,” she said.

“A lot of people in my circle of friends were women purchasing their homes when they got married, but I still felt like I wanted to build my own wealth and buy.

“If and when I met someone, it’s something that just added to what I bring to the relationship. It didn’t make sense to wait.”

In Australia single men still lead single women when it comes to applications for mortgage finance, according to Aussie Home Loan data reported by in 2016, but the gap is closing. Aussie Home Loans data said 12.34 of mortgage applicants were single men and 11.22 were single women.

Swinburne University social researcher Andrea Sharam said historical discrimination against Australian women in the loan approval process was shifting.

“It’s appalling to suggest women are more financially illiterate than men,” Sharam told

“I think younger women in particularly are now thinking about housing as something they do as a part of their life plan … it doesn’t matter if they get a partner or not.”

Why do women suffer more financial stress than men?

Recent studies have found women feeling considerably more financially stressed than men – but why?

AMP’s Financial Wellness report, released in October 2016 and based on online interviews done by Kantar TNS in June that year, found that 30 per cent of female respondents felt financially stressed.

This compared to only 19 per cent of men interviewed – making self-reported financial stress a huge 58 per cent higher for women.

In 2014, the Australian Psychological Society reported “personal financial issues” were a major source of stress for 53 per cent of women but only 44 per cent of men. The APS found three main causes of stress amongst Australians (in order) were personal finance, family issues and personal health.

AMP’s study found the main financial stressors in people’s lives are (in this order), bad debts, home loans, retirement, supporting the family and budgeting.

In the United States, Californian company Financial Finesse found 55 per cent of mothers earning less than US$60,000 reported “high” or “overwhelming” levels of financial stress. Male parents of a similar age group and income level were 40 per cent less likely to feel as bad.

While there are often only small discrepancies between men and women around financial values and stressors, women almost always report more negative feelings about money, even if only marginally.

The reasons why are, sadly, at best anecdotal and certainly elusive.

While it’s not proven as an explanation for women’s financial stress, historical and current pay inequity almost certainly plays a role. On average Australian women in fulltime work earn 17.3 per cent less than men ($277.70) according to the Workplace Gender Equality Agency. That gap has “hovered between 15% and 19% for the past two decades”.

At the same time, women traditionally have had more responsibility for the day-to-day running of the home, such as domestic duties and childcare. In recent times though, generally speaking, women’s involvement in financial decision-making – and sharing costs – in relationships has increased.

One could speculate shouldering more financial responsibility while still earning less and doing more than men at home might be a factor in women’s higher levels of financial stress. There is also evidence that risky behaviours with money, such as impulse spending BY MEN AND WOMEN are linked to feelings of stress, guilt, boredom and anger.