How to Navigate Divorce and Family Finances During the Holidays

Written by Kimberly R. Nelson, C.F.A., C.D.F.A.

The holiday season is supposed to be the most wonderful time of the year, but if you are newly divorced, in the middle of the divorce process, or simply contemplating the future of your marriage, it is probably anything but wonderful. We are constantly surrounded and influenced by television and social media that hounds us with endless tips for decorating, hosting festivities, preparing lavish meals, and giving gifts. 

Advertising depicts joy-filled family gatherings, romantic gift-exchanges, and domestic bliss. It’s a lot to live up to, and you may be feeling like your life just doesn’t meet that mark. Holidays can be stark reminders of happier times, and forming realistic expectations can go a long way as you adapt to life’s changes.

Divorce or not, the holidays have a way of intensifying feelings across the happiness spectrum. This season of ritual celebrations and family traditions have a way of magnifying feelings of anxiety, depression, and financial tension that have been just under the surface all year long.

Surviving the “Season of Divorce”

After years of working closely with Family Law attorneys and couples who are separating, one thing has become blatantly clear to me: The holiday season is ground zero for divorce. It is a well-documented fact that most divorce proceedings begin during the first three months of the year, right after the stress-infused period of Thanksgiving, Hanukkah, Christmas, and New Year’s celebrations. In fact, so many couples file for divorce during January, February, and March, that these three months have become collectively known as the “Season of Divorce.” Even though most divorcing couples will cite money as the biggest problem in their relationship, it stands to reason why this “Season of Divorce” occurs right after a very expensive time of year, when financial pressures come to the forefront of our minds and relationships. These pressures don’t get easier once you are on your own and on solo Santa duty. The expenses, time commitments, and shared custody schedules are enough to have any single parent crying “bah humbug!” by the time it’s all over. So what should a recent (or contemplating) divorcee do at this time of year to keep their budget and personal sanity intact? I have some answers!

If you are going through a divorce...

Going through a divorce during the holidays can be particularly emotionally wrenching, which is why many people don’t do it. Instead, they put it off until January. So, if you are still married, but a separation is looming, here are 3 financial tips for getting through the holidays:

1. Curb Reckless Spending

   The holidays can quickly become a time of free-flowing gift-giving. Additionally, if things have been tense around the house, you may feel even more inclined to spoil your kids with expensive presents. Divorce can be a costly process, and running two households after the divorce is final isn’t cheap either. To help keep your spending in check, create a list of gifts you plan to buy ahead of time and don’t over do it.

2. Create a Budget that Works for You and Stick With It

   If you are hosting any events this year, going away to visit family, or attending a few parties, all of the related expenses can add up fast. Last year, one of my newly single clients was hosting her annual “Friendsgiving” celebration, where she planned to invite about 35 friends. By the day of the party though, the guest list had ballooned to nearly 80, meaning her expected budget for the party had more than doubled. She conceded that this was not money well spent, especially since the entire event just added to her stress level at an already emotional time.

3. Hold Off on Making Any Big Financial Decisions--Slow Down!

   Refinancing your house, consolidating debt, or making any big purchases can wait until after the new year--and only after you’ve consulted with an expert like a financial advisor. They will help you to determine if these steps should be taken before or after the divorce filing.

If you are already divorced...

It’s widely agreed upon that one of the most challenging times of year to be a divorced parent is during the holiday season. The added pressure surrounding the holidays can be overwhelming on top of the heightened emotions that come with divorce. If you are newly divorced, in the process, or still wading through the anxiety that can linger even years after a divorce, here are a few ideas to help you get through it:

1. Let Your Children Help Plan the Holidays

   It sounds cliché, but it’s true what they say: the best things in life are free. If your children are old enough to express their feelings, ask them how they want to spend the holidays. This will give them something to look forward to, and make them feel like their opinion matters within the family. This also might make it easier on you and your ex to plan the schedule. If your kids really want to go ice skating, sledding in the park with their friends, or just watch their favorite holiday movie, you can come up with a schedule to fit in all of those fun things without breaking the bank. Many of them can also be done while they are at the other parent’s house. So, sharing some of these ideas with your ex is not a bad idea. This leads me to my next point.

2. Avoid a Gift-giving Competition with Your Ex

   Let’s be honest. Even if your divorce was amicable, there is a natural impulse to want to be the more indulgent parent. It’s very hard to resist this urge around the holidays, especially if you are looking to make up for some of the emotional turmoil your children suffered during your separation. Remember that the goal here is for your child to feel loved and cared for by both you and your ex. A bidding war for their affections is not the way to achieve this. Instead of trying to outshine your ex, attempt to coordinate the gift-giving with them. If your child has a big-ticket item on their list, perhaps you and your ex can buy the gift together. Not only does this help keep your spending in check, but your child might also really enjoy receiving something that you both bought together.

3. Talk to Your Kids about Finances

   If your divorce has put your finances in a tight spot, try to find ways to gently let your kids know that the gifts (or vacations, parties, etc.) may need to be a bit smaller this year. Most of us avoid money talks with our kids, but if they are old enough to notice that the pile of gifts under the tree is leaner than last year, then they are old enough to engage in a broad discussion about family finances. This often isn’t easy for children to hear, but trust me, years from now, your children will not remember whether you spent $100, $500, or $1,000 on their Christmas gifts when they were 8. What she’ll remember is the time that you spent together and the love that she felt from both of her parents.

4. Create New Traditions

   In the wake of your divorce, it’s tempting to try to celebrate with your children “the way we have always done it,” so that your children don’t feel the void of their other parent’s absence. However, even though things won’t ever be the same, that doesn’t mean they can’t still be great. Come up with some new ideas to make the holiday season special. I had a client whose children were really struggling during the first year of their parents’ separation. So, to help brighten their spirits, they created an amazing new family tradition that allowed their children to get into the giving spirit of the season. They “adopted” a family through the Salvation Army. They bought presents and even planned a holiday meal for this family, which allowed them to direct the focus away from the pain they were feeling at that time, and instead toward lifting up another family who was struggling in a different way. This became a new family tradition. Today it is one that her now-teenaged children look forward to with great joy.

The secret to getting through the holidays during these times of transition is to keep things simple and take it day by day. Put family first and material goods second. It’s simple in theory, but tough in practice. Understand your limits, and make sure you communicate them to your kids, your ex, and yourself. Regardless of what everyone around you is expecting, staying true to your own limits over the holidays allows you to focus on quality over quantity.

Kimberly R. Nelson is a Los Angeles-based wealth planner and investment advisor, empowering new and contemplating divorcees with the education and motivation to take control of their financial lives. Kimberly's financial and planning skills and expertise include designation as a Chartered Financial Analyst®, and membership in both the CFA® Institute and the Los Angeles Society of Financial Analysts. You can find her at Coastal Bridge Advisors or by email at knelson@coastalbridgeadvisors.com.