First 5s to Budget for Life After Divorce

Even if together you have sufficient resources to cover expenses and then some, thinking about money post-divorce is a scary prospect for most people. Fortunately, there is a way to budget for life and money after divorce.

1^st Calculate total income. Your earnings and your spouse’s, rental income and dividends. From whatever source, if it will continue into the future, include it. List your income separate from your spouse/partner’s.  

2^nd Review expense history. Look back through your records and develop a list of your current on-going monthly expenses. First list fixed expenses, those that do not vary from month to month which includes mortgage or rent, car payments and insurance, internet service and health insurance premiums.  If an expense varies such as utility expenses, look at the previous 12 months of actual history and divide by 12 to arrive at an average monthly expense.  Groceries, out of pocket medical expenses (broken out for each spouse and combining the children’s), and gasoline fall into the category of variable expenses. Finally, list and total controllable expenses, i.e., those that you could cut back on if needed. Entertainment costs (tickets, Netflix, concerts, etc.), clothing, and gifts fall into this category. For now, don’t worry about whether that expense will continue. List what your family has historically spent money on up to this point. 

3^rd  Shape future goals. Perhaps you’ve always kept track of expenses but if not, now you know where your money has been going. Begin to think about where you see yourself in one year. Housing is usually the biggest unknown but think about where you would like to be. Perhaps you want to downsize or simply know that without two of you, you cannot maintain your current home alone. If so, begin looking at housing options, associated costs and start budgeting around those options. Perhaps it’s important to you to keep the family home. If so, base your future housing expenses on current costs. Do the same for each of the categories above and accept that these are estimates only. Remember, you are not tied to the numbers but it’s a good place to start.

4^th  Be realistic. You are not trying to budget for your dream life. Nor are you trying to scrape by on the absolute minimum. Keep in mind that it always costs more to finance two homes than it does one and your spouse/partner will be undertaking this same analysis. So estimate the best you can and know this is only a starting point. 

5^th  Review it. Ask your trusted advisor, coach, therapist and definitely your lawyer to review your budget with you. Someone not intimately affected by your income and expenses might have a more objective eye. 

You might find this Monthly Budget Worksheet helpful as you budget for life and money after divorce. Let us know if you have questions or need help. And remember, this will get resolved. The goal of judges and most parties is to allocate total family earnings so that neither spouse is impoverished and can comfortably live. That will be the case for you and yours too.

Wishing you wisdom, 

deborah bennett berecz