Divorce: The costliest mistakes made in battle

In a divorce, the biggest financial risk is not losing half your assets. It is turning a shared lifetime of work into a lose-lose outcome from which neither partner can truly recover.

I have seen divorces where there was enough wealth to support two independent futures, yet the choices made during the divorce dismantled what had been built. Decisions made under emotional pressure, prolonged conflict, rushed agreements or poorly structured settlements erode wealth far more effectively than markets ever could.

Divorce is one of the hardest places to separate emotion from money, and one of the most important. When that separation fails, divorce does not simply end a relationship – it reshapes the financial foundation of your future.

The emotional reality of divorce

When a marriage or long-term partnership ends, the emotional impact is often immediate. Shame, grief, anger, guilt and fear surface all at once. In that state, clear financial thinking becomes difficult, yet this is precisely when life-shaping decisions are being made.

I have worked with many clients who describe divorce as the moment their protective layers fall away. This vulnerability is often heightened when the separation is unexpected or one-sided. It is also when people are most likely to give away power, make concessions they later regret or agree to outcomes they do not fully understand.

Divorce is far more than a legal process. It is a financial settlement that determines how, and whether, you are able to rebuild, reinvent yourself and fund your next chapter.

Over the years, I’ve seen the same costly patterns repeat themselves when emotions and money collide.

Mistake 1: flight mode – wanting to leave at any cost

One of the most common and expensive mistakes I see in divorce is what I call flight mode.

Flight mode shows up when the need to exit the relationship overrides everything else. The focus is no longer on fairness or creating a sustainable outcome. It is simply about getting out and escaping the discomfort.

In flight mode, people stop negotiating, avoid difficult conversations and disengage from the process entirely. They sign agreements they do not fully understand or walk away from assets because staying engaged feels overwhelming. The focus narrows to short-term relief, often leaving little room to think about what comes next.

The true cost usually becomes clear much later. Once life has settled and financial reality sets in, many people realise that their decision to flee has left them financially exposed. Retirement plans no longer work, choices become limited and what began as an emotional exit becomes a long-term financial compromise.

This is where objective support can make a meaningful difference. Having the right professionals involved can guide decisions with clarity and objectivity, rather than avoidance.

Mistake 2: fight mode – needing to win at any cost

In fight mode, divorce becomes adversarial. Decisions are driven by anger and hurt, and the process shifts from resolution to retribution. The focus shifts away from reaching a fair or workable settlement and towards ensuring the other person loses.

As the conflict escalates, legal costs rise, assets are eroded and more money is absorbed by the process itself, leaving less to fund either person’s future.

By the time the divorce is final, both parties are often financially worse off, and the wealth they built together has been diminished. Mediation, supported by proper financial planning, offers a far better alternative. An objective mediator helps remove emotion from the process and keeps the focus on a fair outcome that protects both parties’ wealth.

Mistake 3: structuring the settlement poorly

Even when couples manage to avoid fight or flight mode, costly mistakes can still be made in how the divorce is structured.

A typical example is one partner keeping the investments while the other receives a monthly payment. What looks reasonable at the time often becomes problematic later on. Circumstances change, resentment builds, and what should have been a clean break turns into an ongoing financial and emotional tie. Divorce is far easier to navigate when there is clarity and closure. Where possible, a clean break allows both parties to regain independence and move forward.

Retirement savings are another area where poor structuring can do lasting damage. I frequently see couples cash in retirement funds and split the proceeds, unaware of the tax implications and the long-term impact of this decision.

In South Africa, the law allows a spouse’s pension interest to be allocated at divorce and transferred into another approved retirement fund in the name of the other partner. This preserves tax-efficient growth and protects the purpose of those savings.

When retirement funds are withdrawn in cash, tax becomes payable immediately, permanently reducing capital intended to fund later life. How retirement savings are handled can make the difference between long-term financial security and financial pressure years down the line.

Mistake 4: abandoning your values

Divorce can bring out behaviour that does not align with your values. In moments of intense emotion, people sometimes act in ways that conflict with their own value systems – withholding, punishing, being deliberately unfair or prioritising “winning” over integrity.

Years later, many people struggle with the financial consequences of their decisions and with how they handled the process itself. Acting in alignment with your values matters because this is something you carry with you long after the divorce is over.

The bottom line

The greatest risk in divorce is allowing emotion to dismantle what you have spent a lifetime building, often without realising it at the time. When wealth is eroded through poor decisions, conflict or rushed settlements, both parties lose. A fair, well-structured outcome protects future security on both sides. It gives each person the best possible chance to move forward.

Kim Potgieter is an independent financial planner, coach and author who helps midlife professionals align money with meaning.

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