How to Budget After Divorce
At a certain point in divorce, most people realize that this process is going to force you to, at a minimum, consider your budget. You can’t run from it. Even if you have a ‘do it yourself’ divorce, when you face living separately, you have to decide what you can afford. In other words, what will fit into your budget. This can be a very intimidating process, but it can also be the first step toward putting your income where you want to versus where you’ve always had to.
For some of us, these money issues may even be what led to divorce. Not having enough. Not agreeing on what is a priority. Spending too much of it or simply refusing to budget. These disagreements crop up in many ways. But now you get to make the final decision. The good news: when you take an honest look at your budget, you might be surprised at what you’ll find. Often, we do have enough, we just don’t plan it out very well.
So now is your chance to plan – what do you have coming in? Note your net income or the amount of money you take home. Of course, there are things that we have coming directly out of our checks besides taxes, but you can look at those if needed after you put your new budget in place. Right now, just note the amount that actually comes home. Now take note of your recurring bills. Things like the mortgage or rent, electricity and phone, etc. These should be bills that you know will hit every month and list them by date. Finally, list your incidentals like groceries and gas. Be sure to include your rare incidentals like an oil change or tags for the car.
Once you have this list, you’ve really outlined your budget. Break the total expenses out into a monthly amount and compare that to your income. Now you can identify if you actually have enough to pay your bills or if you need to reign in some of your expenses. The beauty part is that now you know instead of having to guess. Now you can consciously decide if any extra money goes towards savings or if you really have it to spend.
For bonus points and ease of budget execution, take the next steps. Arrange the distribution of your funds around your actual paydays and due dates. Be sure to separate that money that you allocated for the rare oil change and hold on to it, so that it’s there when the time comes. Consider putting the debit and credit cards aside and using actual cash so you physically process that money is spent. It will help dramatically with the tendency to overspend when using plastic.
One of the most important decisions that you can make to empower yourself financially, is to set your budget. Learn how to spend less that you make. If you need help, consider hiring a budget coach. A coach will help you with accountability and guidance towards reaching your financial goals. Contact us at Smarter Divorce Solutions and we’ll help you get started.