What Divorcing Couples Can Learn from The Psychology of Money

When most people think about divorce, they think about heartbreak, legal fees, custody schedules, and dividing property. But few realize that at the heart of many divorce disputes lies something more primal: our relationship with money. That’s where Morgan Housel’s bestselling book The Psychology of Money offers valuable insight for couples untangling their lives in the wake of separation.
Housel’s core message is simple but powerful: managing money is not about spreadsheets and calculators—it’s about behavior. And that lesson applies deeply in divorce. Here’s how.

1. “Doing well with money has little to do with how smart you are and a lot to do with how you behave.”
In divorce, emotional decisions often override financial logic. A spouse may insist on keeping the marital home not because it’s wise, but because it represents security, nostalgia, or victory. Others may fight to keep an asset that is a financial liability simply out of spite.
I’ve seen time and again how emotional attachments to money or property cloud judgment. Housel reminds us that success with money comes from humility, patience, and self-awareness—not necessarily intellect. Divorcing couples would do well to take a step back and ask: Is this decision about financial well-being, or emotional retribution?

2. “Wealth is what you don’t see.”
This concept is crucial in equitable distribution. Many clients come into my office focused on tangible assets—cars, homes, retirement accounts. But wealth is also about savings, security, and peace of mind.
Focusing on lifestyle items and issues during divorce (e.g., the bigger house, luxury car, club memberships, etc…) can result in long-term financial stress. What if instead of aiming for the flashy asset, you prioritized a more balanced portfolio, reduced liabilities, or ensured child support was manageable for both parties? Divorce isn’t just about splitting the past—it’s about setting up a viable financial future.

3. “Saving is the gap between your ego and your income.”
Divorce often creates two households out of one income. Suddenly, what used to cover a single mortgage must now cover rent, child expenses, legal fees, and possibly alimony or support. If either party clings to their pre-divorce lifestyle out of pride or fear, the consequences can be financially devastating.
One of the issues I see clients struggle with the most is the fear of losing status or elements of a lifestyle that may not be viable immediately after a divorce. Luxuries and conveniences such as travel, dining out, clothing expenditures, club memberships and the like can be very hard to let go of on top of the other losses felt in a divorce. In some situations, it comes with the fear of losing social status and even social relationships.
But, trying to maintain a pre-divorce lifestyle on a post-divorce budget can be difficult. It requires budgeting honestly, being transparent in disclosures, and sometimes adjusting expectations and lifestyles to achieve financial stability. Housel’s wisdom here is critical: divorcing well often means swallowing some pride and prioritizing stability, not appearances.

4. “Controlling your time is the highest dividend money pays.”
A clean and effective divorce agreement gives both spouses the freedom to move forward. Endless litigation drains more than bank accounts—it eats up emotional bandwidth and time that could be better spent rebuilding and re-stabilizing your relationship with your children.
In custody and alimony issues especially, the battle for “more time” or “more money” often conceals deeper insecurities or unresolved hurt. But Housel’s insight applies: money (or a favorable settlement) should serve your life, not dominate it. The true goal of a divorce settlement should be clarity, security, and peace—not a pyrrhic victory.

5. “You’re not just managing money; you’re managing your relationship with money.”
Finally, Housel’s overarching theme is that financial decisions are deeply personal and rooted in our upbringing, traumas, and values. Two spouses can look at the same financial situation and interpret it completely differently—not because one is wrong, but because their relationship with money is different. Some clients feel wealthy and safe with six-figure net worths or less, some feel unsafe and insecure with millions.
The best divorce attorneys and agreements recognize that each spouse comes with a different money mindset. A good collaborative family law attorney doesn’t just push for maximum gains; we help craft settlements that work in real life, honoring the unique financial psychology and needs of each party.

Conclusion: Divorce Is a Financial Reset—Use It Wisely
Divorce is as much a financial decision as it is an emotional one. And as Morgan Housel teaches us, how we handle money is more about mindset than math.
For divorcing couples, this can mean prioritizing long-term security over short-term victory, recognizing emotional biases about money, and embracing a forward-looking approach to finances instead of a post mortem on the marriage. As the old joke about divorce lawyers goes “any idiot can divide by two”—but it’s up to you (and your legal team) to bring wisdom to the process.
If you’re facing divorce and feeling overwhelmed by the financial unknowns, let’s talk. With the right mindset—and the right legal guidance—you can come out of this chapter not just surviving, but ready to thrive.