When your expenses double and your income splits in half, you’re left spinning and wondering how you’ll ever keep manage your budget after divorce. A household that once shared expenses is now reliant on one income instead of two. If you make just enough to squeak by every month, you’ll be unprepared for an emergency or unexpected expense, and you can’t even think about splurging on a treat like a new wardrobe or vacation. With all of the stress that divorce brings, financial stress is possibly the most concerning.
Here’s How to Rewrite Your Budget After Divorce
Even if you’ve used the same budget successfully for years, you’ll have to rewrite it after a divorce, then revisit it every three months to determine how it changes. For example, without your spouse in the home, you may see a reduction in utility usage, which means you won’t have to set aside as much each month. Here’s how to create a realistic budget for yourself:
- Draw a line down the middle of a piece of paper. On one side, list all of your income streams, which may now include alimony or child support. On the other side, list all of your expenses.
- If you’re unsure of how much you spend on variable costs like gas and groceries, either look back at your credit and debit card statements or track those expenses for a month. For now, err on the side of over-estimating – if you think you spend anywhere from $300 to $400 a month on groceries, budget for $400 and then scale back later if you can.
- Even if you make more than you spend, think of ways to cut back your spending that won’t negatively impact your lifestyle. Take a good look at what you’re spending money on and make choices based on what’s best for your household now. This may be different from what it was like when you lived with your spouse. For example, do you have cable because you want it or because your spouse watched TV a lot?
The most important part of writing your budget after divorce is to check your emotions at the door. If you make more than you need, don’t celebrate by booking a ticket to Hawaii. If you have less than you need, don’t panic – unless you’re so far behind on bills right now that you’ll lose your home or have the power shut off, you have time to work it out.
Focus on the Absolute Necessities
If your budget is being walloped by your divorce, you may not know what to put first. You may also be stuck with debt your spouse never told you about. It’s tempting to throw money at all of your problems as they arise, but if that leaves you unable to pay your mortgage, you’re not doing yourself any favors.
Instead, always make sure the “four walls” are taken care of: food, shelter, clothing, and transportation. Shelter isn’t just your home, but also your utilities (electricity, heat, water). Clothing doesn’t mean go on a shopping spree, but it does mean making sure you have wardrobe essentials, like snow boots and work clothes. Whenever you’re faced with a financial decision, always check that the four walls are covered first so that you have somewhere to live and a way to get to and from work.
Don’t Make Big, Budget-Affecting Decisions
Post-divorce is not the time to make big decisions that will have a significant impact on your budget. Don’t overspend on a new home or flashy car as an emotional reaction to your divorce, even if you think you have the budget to support it. Spending in the form of retail therapy could leave you in a lurch, whether it’s a new city you can’t adjust to or a new car loan that you can’t afford. If you absolutely have to make a big purchase, do so wisely. For example, maybe your teen is heading off to college and they need a car. You don’t have to get them the BMW they’ve been dreaming of – buy them a budget-friendly, safe car that won’t leave you unable to support yourself.
You’re definitely allowed to make life- and budget-changing decisions, but get a handle on both your finances and your emotions first. In the meantime, if you’re itching for a change, take on projects you can afford or even ones that will reduce your expenses.
It’s possible to shake up your life without breaking the bank. For example, give your home a green overhaul. You can plant trees outside that will shade your home and reduce your AC usage – not only will that be good for the environment and your utilities, but the physical effort will work out some of your stress.
Even if you make more than enough to support your household on your own, you still need to refigure your budget after divorce. Your financial situation and responsibilities are changing, and you need a handle on how much you have coming in and where it has to be spent. While you may have enough for the necessities and extra spending money every month, you’re now the sole budgeter of the house, and you have to take the role seriously.