Plan Your Budget Accordingly in Five Easy Steps
As we have discussed before, divorce is one of the most life-changing decisions that can affect an entire family. It doesn’t matter whether you have been preparing for a divorce for an extended amount of time, or if the divorce seemed to come out of thin air, knowing how to handle a divorce emotionally is one thing, but being able to prepare for your future financially is a whole different ball game.
What should I look at to determine a budget?
First off, you need to understand what your income will look like after your divorce. This is not your joint income with your spouse, but the income you receive solely, after taxes. Take into consideration all sources of income including any investments like rental property or money from an oil well that is on a piece of your land. Also include your expenses such as bills, credit card debt, insurance costs, daycare payments, mortgage or rent, transportation fees, any retirement or savings contributions, college funds, or emergency funds. Include any recurring costs that are not bills as well. For example, do you grab a coffee on your way to work in the morning? Include this in your budget. Do you get a haircut every month? Maybe you get your nails done, go to the movies, grocery shop every couple of weeks, and eat out occasionally. How much are you going to have to save for your child’s birthday party, Christmas present, dance class, or sports gear? Include all income and expenses that you can think of, even if you think you are overshooting, so you are prepared and can prioritize where your money will go each month. Do not include job bonuses or raises that you may be expecting, as these are not guaranteed pay.
We could attach the following worksheet if you think it’d be useful
What if my expenses exceed my new single income?
Try to find ways to decrease your spending and increase your income. You could always do some freelance work such as blog writing, take on a new hobby and sell your creations, or simply just cut out unnecessary expenses. For example, is it a priority to go to the movies, get your nails done, eat out more than twice a week, or grab a coffee every morning on your way to work? These seemingly little things add up quickly. Look at these expenses as ‘treat days’ if you are able to cut down on some of them. That way, when you do get that cup of coffee or go see a new movie, you won’t only be excited about getting to do so because it is outside of your new routine, but you’ll be able to save and plan for it in your budget.
How can I stick to my budget?
Sticking to your budget is an important part of your post-divorce life. You need to know where your money is coming from and where it goes when it leaves your wallet. You can do so by downloading budget apps on your phone, make a spreadsheet and keep it up-to-date with your paid bills and money spent as well as your income, or even just by keeping your budget visible by placing your plan somewhere in your home that you will see frequently like your refrigerator.
Make a Plan for Your Future
Now that you have tallied your income and expenses, make a plan for how you are going to stick to your budget. Decide what you need to cut out of your budget and update policies or documents as needed (i.e. your auto insurance policy with your spouse’s name on it, your will or medical power of attorney, etc.). While you’re at it, draft your children’s schedules so you can plan accordingly (both for time and financially), and set up a P.O. box if you are not yet divorced so you can keep your financial statements and planning more private.
Breathe – You Are Going to Get Through This!
Divorce is something that no one is prepared mentally to go through – no matter how bad the situation may be at home. It does get easier over time, but please remember, you are not alone in your battle. There are people here for you to guide you and walk beside you to get you through this difficult time. You will smile again. You will laugh again! The more you prepare for your life post-divorce, the better you will feel about making decisions on your own and starting over. If you’re ready to talk to a divorce lawyer and discuss what your next steps should be, please do not hesitate to contact us. We’d be happy to discuss any of your concerns.