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Good planning can reduce risk of financial trouble in divorce

How are your saving habits? Chances are that if you are like most Minnesotans, you feel you could be doing better. If there's one thing that financial experts can agree upon it is that average people should be socking away a great deal more than they are currently.

Saving should always be a major factor in anyone's financial planning because changes in life can occur without much warning and when they do, the financial repercussions are significant.

Divorce can be one of those life-changing events. Suffering a debilitating injury or illness can be another. If several of those things happen together and you don't have the benefit of a savings safety net, the effects can be devastating as one story we read recently highlights.

The item was about a 49-year-old registered nurse. Having married young and having three children she found herself facing divorce after 18 years of marriage. The couple had little in the way of savings.

Motivated by a desire to ensure she retained custody of her boys, she didn't pay as much attention to issues related to division of property as she might have. She got the house, car and the bills. Her husband took a military pension and savings he'd earned from duty in the Air Force reserves.

Even though she had been the major source of family income during the marriage, she found that life after divorce, especially without savings, proved to be hard. And then about a year after the divorce, she got into a bad accident that left her disabled and facing major medical costs.

Despite disability insurance benefits, she found the going rough. She lost a second job she was working. Faced with trying to pay for her boys' college educations, she got behind on the mortgage, borrowed from her own small retirement account and even from her oldest son, borrowed against the house and started using charge cards for everyday expenses.

This woman has since gotten well enough to return to work and is digging her way out of her financial straits. As she puts it, "I've learned that unfortunately you have to be prepared."

For married couples, part of that preparation can and probably should proper savings and include planning how assets and liabilities will be fairly distributed in the event of a divorce.

Source: CNBC, "No savings? No safety," Kelley Holland, Nov. 11, 2015

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