Lately, I’ve seen a lot of people stay in marriages with financially irresponsible partners after the love has gone because they are worried about what it would cost them to get divorced. Financial irresponsibility might include extreme risk-taking behavior, consistently missing bill payment deadlines, refusal to include their partner in major spending decisions, taking on more debt than they can afford, spending beyond their means, an inability to hold down a job, or a proclivity toward financial dishonesty. This is an exploration of the financial cost of staying in this type of marriage versus cutting ties.
Immediate Financial Consequences
Because the symptoms of financial irresponsibility can look different from person to person, the financial consequences may also differ. I know someone whose spouse committed tax fraud, then disappeared without a trace. The spouse who could be contacted was then pursued by state and federal tax authorities and had multiple bank accounts seized.
Here are some potential immediate consequences that could occur if you have a financially irresponsible spouse:
- Large, unexpected bills you must cover.
- Seizure of your joint assets by creditors.
- Increasing debt.
- Damage to your credit score.
- Lack of excess funds to pay for emergencies.
- Living paycheck-to-paycheck or worse.
Long-Term Financial Consequences
Because of this short-term damage, longer-term financial consequences can emerge if the issues are not addressed. I know this woman who inherited a house and whose financial plan was to eventually take the significant equity accumulated in her home and do a reverse mortgage in retirement to live off the income for the remainder of her life.
She got married and quickly became sick, handing over financial management to her new husband. Instead of caring for her and ensuring her plan was in order, the husband dipped into her home equity to repay his gambling debts and make large gifts to his family members. Eventually, when the woman recovered, her husband left her, and her income strategy was entirely because of the depleted equity.
While this is an extreme example, here are potential long-term consequences:
- Insufficient retirement income.
- Unstable living environment.
- Significant principal risk in investment portfolios.
- Lack of preparedness for major obligations like funding a child’s education.
Emotional And Social Costs
Outside of the actual financial costs of this type of marriage, money issues can take a significant emotional toll. You could experience increased anxiety or marital conflict. You could also experience some social stigma if others know about your financial struggles.
Strategies To Improve The Situation If You Choose To Stay
If you choose to stay with a financially irresponsible spouse, it will be necessary to either adjust their behavior or take steps to protect yourself. Communicating openly, agreeing on a joint budget, and setting boundaries around financial decision-making can be effective solutions.
If you’re having difficulty working it out alone, it could be beneficial to seek a financial counselor or debt specialist.
If none of the other solutions will work, it may be time to consider keeping your financial lives entirely separate. This can be difficult to do, especially in a community property state, but you should usually at least be able to protect assets that are inherited or that you owned prior to marriage by keeping them completely disentangled from marital assets. Filing taxes using the Married Filing Separately status can also provide some additional protections.
Decision To Stay Or Leave
Ultimately, your decision to stay in this kind of marriage or choose to leave your spouse will not be strictly financial. Emotions will also play a big role.
Some benefits of staying would be the opportunity for change, growth and improvement. Emotional and familial ties can also play into this. Many spouses come together and try to make it work for their children.
Some potential drawbacks of staying include emotional distress and failing to meet your financial goals.
Ending the marriage may come with significant upfront costs and even potential ongoing costs. However, all of those costs are based on the responsibilities and duration of the marriage.
Let’s say you’re 40 and you realize you have been married to a financially irresponsible partner for the last 10 years. Your separate assets from before the marriage are worth $1M and the assets you accumulated during the marriage are worth $500,000. Let’s say this person also relies on you for financial support so if you got divorced, the court would order that you pay alimony of $50,000 for 10 years. If you add the alimony payments and half of the marital assets, the divorce would cost you about $750,000, not accounting for inflation.
How much would you be saving by paying that $750,000 and cutting your losses? If that person relies on you for $50,000 per year in financial support today, that potential lifetime cost from now to age 95 could be about $6.8M, accounting for 3% annual inflation. That’s not even accounting for the potential separate debt or poor financial decisions they might make outside of that support need.
Conclusion
Staying in a marriage with a financially irresponsible partner can lead to significant immediate and long-term financial consequences, including increased debt and insufficient retirement savings. While emotional and social factors also play a role, weighing the costs of staying versus leaving is crucial. Strategies like open communication and financial counseling may help, but the decision ultimately hinges on personal priorities and financial realities.
This informational and educational article does not offer or constitute, and should not be relied upon as, tax or financial advice. Your unique needs, goals and circumstances require the individualized attention of your own tax and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its associates and affiliates do not provide tax or legal advice or services. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not endorse, approve or make any representations as to the accuracy, completeness or appropriateness of any part of any content linked to from this article.
Cicely Jones (CA Insurance Lic. #: 0K81625) offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers annuity and insurance products through Equitable Network, LLC, which conducts business in California as Equitable Network Insurance Agency of California, LLC). Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. Any compensation that Ms. Jones may receive for the publication of this article is earned separate from, and entirely outside of her capacities with, Equitable Advisors, LLC and Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). AGE-7623352.1 (2/25)(exp. 2/29)
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