Negosentro | How to Manage Your Post-Divorce Budget | After a divorce, some people feel like celebrating and they splurge on a fancy car, an expensive trip or even some funky real estate. However, most people find themselves in a difficult financial position, since the loss of their spouse’s income contribution to the household was greater that the drop in expenses. That’s why it’s vital that those who’ve just finalized their divorce plan well and draft a new budget, since the situation has changed dramatically. Just like the divorce has hopefully brought about mental stability, it should have the same effect on your finances. To help you prepare your budget, we’ve compiled a list of things you need to take into account while planning for the future.
Make a list of your current income and expenses
This is definitely the first thing you should do. One part of the list should include your income streams, such as your salary, alimony, child support and investment income. The other part should list your expenses, such as rent/mortgage, insurance, auto loans, utilities, credit card debt, food, education, commuting costs. Chances are you’ll forget something, but that’s normal. You will update your list after some time when you start tracking your expenses. Yes, it’s vital to track your expenses to check whether your initial expectations were correct.
Add the items up
You can either feel relieved or anxious once you add the numbers up. If you have more income than expenses, check whether you’ve forgotten an expense or two. On the other hand, if you see that your expenses are higher than your income, don’t panic. Wait until you start tracking your actual expenses to see where you can cut some of them. It should take a few weeks before you know for certain what your financial position really is.
Increasing income if necessary
Many divorced people are forced to take up a second job because their income is not sufficient to keep the same standard of living. This is rather difficult and may put a lot of strain on you, especially if you failed to react properly while arranging your divorce and ended up on the losing side financially. That’s why many Australians, for example, hire professionals to help them get the most out of their divorce in terms of money. This investment in experts, such as these reputable family lawyers from Sydney, pays off very quickly, because you may not know what your rights are.
If, on the other hand, there is no chance to revise the arrangement, you need to look for an additional job. Don’t despair, because there are so many jobs that you can do online, which should be enough for you to make the ends meet and possibly save some money.
Probably the most important part when it comes to budgeting is tracking your expenses and income. It gives you a firm handle on where your money comes from and where it goes. Even if you’ve never done this before, now is definitely the time to adopt this practice. You can write things down in a notebook or make an online copy of your income and expenses, but make sure you don’t miss a thing. The more detailed the list is, the better insight you’ll have, which will in turn help you plan much more efficiently.
Get rid of debts
You should strive to pay back all the debts you have as soon as possible, so that you can start the new phase in your life unburdened by financial difficulties. Also, it would give you a major morale boost and you’ll be able to focus better on the things you’re planning to do. The sooner you’re debt-free, the sooner you’ll start enjoying life more and be able to plan new short- and long-term investments.
Cut the costs
No matter how well-off you may be, you should try to cut some of the unnecessary costs, such as expensive meals at restaurants. Cooking at home will save you quite a lot of money, but you can treat yourself occasionally and go out for a meal. Just avoid places that are expensive, no matter how great the food may be. Also, reconsider your budget for shopping. Are the items you like really necessary at the moment? If so, focus on buying them on sales or when the demand for them is low.
Being the only one in charge of providing income for the whole family (or just for yourself) can be stressful. However, it shouldn’t prevent you from making rational decisions and sticking to your budget. If you plan carefully and have a long-term vision, you’ll stand every chance of being financial stable, which will also reduce the stress significantly.