Post-Divorce Budgeting: Your 9-Step Guide to Financial Stability
How do I manage my expenses after a divorce?
Chances are, after your separation, your budget will be a little lop-sided and that can be stressful, so here are my 9 Tips to Eliminate Post Divorce Money Stress. Budgeting is vital. Using our Free Divorce Budget Worksheet will get your heading in the right direction.
Remember, the same income supporting one household must now support two. You’ll likely be juggling a smaller monthly income than you’re used to. Now’s the time to figure out your budget. Don’t wait until months later when you’ve gotten deeper in debt, and your credit is ruined
How do I create a budget for divorce?
When it comes to your budget, be objective. Begin by gathering documentation. This includes bank and credit-card statements for the last year. As you itemize your expenses, avoid the “double dip.” For example, if you buy groceries on your credit-card for the points, don’t count your grocery purchase and the credit-card payment.
Cash withdrawals at the bank machine is an area most people miss. You want to be able to account for those funds.
When using our Free Divorce Budget Worksheet, a good test is to have a number in each expense category. Then have a trusted partner (objective friend) review your inputs. Start with the pre-separation scenario using the Free Divorce Budget Worksheet found in the Preparing for Divorce companion workbook.
With two versions of the worksheet, fill in pre-separation expenses and post-separation projected expenses. Go to the post-separation chart and bring over each expense with an increase or decrease in its value. For example, an increase would be snow removal, if you would need to contract it out. Food expenses would probably decrease.
For now, focus on expenses. Income and child/spousal support amounts can be added later.
Here it is 9 Tips to Eliminate Post Divorce Money Stress
1. Create a list of all of your regular expenditures
Now see what you can reduce or trim
Fixed expenses are those that you have every month (car payments, mortgage payments, insurance).
Consider these questions when thinking about cutting costs:
- Will you be downsizing to a smaller place?
- Can you downsize your current car?
- Can you reduce any insurance expenses?
- Do you need a cellphone and a landline in your home?
- Can you live without bottled water delivery, etc?
2. Categorize Your Expenses
Think about your expenses in two categories:
- Regular: recurring bills like your cellphone, hydro or mortgage
- Irregular: bills you pay here and there throughout the year.
Irregular expenses may be:
- Back-to-school expenses
- Tuition
- Birthdays
- Vacations
- Christmas/Hanukkah
3. Look at Your Fluctuating Expenses
Fluctuating expenses typically include those little indulgences we enjoy. These are things like:
- Dining out
- Hair cuts or manicures
- Your morning Starbucks
- Golf club fees
- A gym membership
Try to cut out all expenses not absolutely necessary.
4. Compare Your Income to Your Expenses
When you compare your income to your expenses, you may see a noticeable imbalance. Go back and decide what you can cut.
- Can you brown bag your lunches?
- Can you eliminate those movie nights?
- Maybe doing your own hair colouring or nails for now, is an option?
- Contact your creditors and request for lower payments. Most creditors will work with you to make sure you don’t fall behind.
- Keep cutting needless expenses until you have funds left over at the end of the month.
5. Your cuts don’t need to be permanent
Remember, your changes don’t need to be permanent. You just want to try to trim down until you can increase your income. Once you’ve been on your own for a while you’ll know how far you can stretch your dollars. When you recognize you can have the extras back at some point, it is much easier to eliminate them now.
6. There’s a Difference Between Wanting and Needing
Consider your wants versus your needs. Survival may come down to cutting everything from your budget but the needs. Your priorities may have to shift. Realistically, many things you thought were necessities many become discretionary.
How do people afford their place after divorce
Look closely at the talents you possess and get creative in ways you can build your cash flow. Can you do freelance writing? Do you have artistic ability? Could you do home maintenance for others? One client of mine did all his friend’s oil changes until he paid off some credit cards. Put on your thinking cap, and you’ll come up with ways to earn extra monthly income.
8. Avoid Any New Debt
It may seem tempting to use a credit-card rather than giving up a luxury you enjoy. Don’t give in to the temptation. It’ll make your future financial outlook much glummer for much longer. Don’t allow the emotional stress of divorce cause you to spend more than you can afford.
Will divorce ruin me financially?
Financial problems bring stress. Avoiding that stress will make it easier to give up things you can live without. Your situation isn’t permanent. This, too, shall pass. Your financial picture need not be as bleak as it first appears. Use your creativity and self-control to make needed changes, and you’ll be back on your feet much sooner.
Should you require our advice and assistance, please do not hesitate to contact Ken S. Maynard at Divorce the Smartway. To Schedule, a Complimentary “Get Acquainted Call” with Ken. TAP HERE
Conclusion
Navigating through your finances post-divorce can be a daunting task, but it’s not insurmountable. It requires meticulous planning, budgeting, and a thorough understanding of your income and expenses.
The article provides a detailed 9-step guide to alleviate post-divorce financial stress. It underlines the significance of creating an exhaustive list of regular and irregular expenses, discerning between wants and needs, and steering clear of new debts. It also proposes inventive ways to boost income and reminds us that the financial adjustments made during this period are not permanent.
The key is to strive for financial stability and avoid undue stress. It’s essential to be proactive, pragmatic, and disciplined when managing your finances. If you find this process overwhelming, professional advice is just a call away. As a Accredited Divorce Financial Analyst (ADFA), I can provide valuable guidance to help you navigate this challenging period.
Remember, your financial situation post-divorce is temporary. With careful planning and discipline, you can regain financial stability and peace of mind. So, why wait? Schedule a complimentary Get Acquainted Call with me today, and let’s start building your post-divorce financial plan together.
TAP Here to Schedule a Get Acquainted Call
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Ken Maynard ADFA, Acc.FM
I assist intelligent and successful couples in crafting clear and straightforward separation agreements, ensuring a smooth transition towards a secure future. This is achieved in four meetings or less, sidestepping the excessive conflicts, confusion, and costs often associated with legal proceedings. You have the option to collaborate with me via video conference or in-person with a DTSW associate at any of our six Greater Toronto mediation centers, located in Aurora, Barrie, North York, Vaughan, Mississauga, and Scarborough.
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