Divorce brings about significant changes in every aspect of your life, including finances. Your income, expenses, and responsibilities will all likely change after the termination of your marriage. Creating a post-divorce budget is a crucial step in adjusting to your new life and ensuring you are financially stable while navigating the transition. To learn more about how to best create a post-divorce budget, continue reading and work with a Plainfield divorce & family law attorney.
How Do I Create a Post-Divorce Budget?
To successfully create a post-divorce budget, consider the following steps.
- Figure out how much money you make: Before you can create a budget, you need to understand where you stand financially. Begin by making a list of all sources of income and assets. This includes your salary, bonuses, commissions, alimony, child support, property, assets, or other sources of income.
- List your expenses: Document all of your expenses and debts, both fixed and variable. Fixed expenses are costs that remain the same month to month, like mortgage payments, rent, utilities, car payments, loans, insurance premiums, child support, etc. Variable expenses, on the other hand, fluctuate. These may include groceries, transportation, and entertainment.
- Determine your priorities: After figuring out where your money is coming from and going to, you must prioritize your spending. Prioritizing will help you manage your finances more effectively, especially in the early stages of your post-divorced life. Evaluate what expenses are “needs” and what are “wants.” Needs are things like housing, transportation, food, insurance, and anything you cannot live without. It is also important to continue allocating funds to debts or financial obligations that you have. You can keep some “wants,” but you should consider trimming some unnecessary expenses. Decide which items are must-haves and which you can go without, at least for the time being.
- Do the math: After figuring out your income and expenses, subtract the two to figure out how much, if any, money you have left over. If the number is positive then you can afford the lifestyle you have created through the budget. If the number is negative, however, then you are overspending and need to adjust.
- Adjust the numbers: If you are overspending, you simply have to adjust. This is common after a divorce, as you are likely transitioning from a dual-income household to a single-income household. You can try to find more or higher sources of income, reduce your spending, and cut out unnecessary expenses.
If you are still having a hard time, it may be worthwhile to discuss your budget with a financial advisor. It is crucial that you are thorough in each step of the process. You have to be honest with yourself when creating a budget to ensure all expenses are accounted for. Although it can be hard to cut costs and prioritize, it is important to ensure you and your children can maintain financial stability during this new phase in your life.
For more information and legal advice during your divorce, consult with a skilled family lawyer today.
