Financial Planning During Your Divorce- Crafting Your New Budget
Uncontested Divorce Mediation
Posted August 7, 2018

Divorce is devastating in a number of different ways–but one of the biggest challenges many people face are in their finances. During the years of your marriage, you shared a budget with your spouse: combined income that went into paying for your lodging, your food, and your other expenses. Once you're divorced, on the other hand, you'll have to take a new look at your finances. Crafting a budget on your own, especially if it's the first time in years that you've had to manage your own finances, can be a serious challenge. This simple guide will help walk you through the process.
Step One: Take a Look at Your Actual Income
What do you, personally, make each month? This includes both the amount that you actually make as your salary each month as well as important additions like tips and commissions. While the latter may be unpredictable, you'll find that they generally average out over the course of the month. Knowing how much you can expect to come in will make it easier to shape the rest of your budget.
Step Two: Consider Alimony or Child Support
Whether you're the spouse who will be receiving alimony or child support or the one who has to pay it, it's critical that you consider this as part of your budget. Make sure that you carefully consider how this will impact your net income each month, whether you'll be receiving it or paying out. Keep in mind how that payment is being handled: if your former spouse is known to be unreliable or being combative about these payments, it can be important to know how to shape your spending without them should payments fall behind.
Step Three: Calculate Your Bills
Take a look at your new residence and what you're paying in rent–or, conversely, what you're paying on your mortgage. Add in your gas, your insurance, and food costs (which, incidentally, will probably be lower now that you're living on your own). Take a look at what you'll actually need to be able to pay with your income each month. Make sure to include:
- Your homeowner's or renter's insurance
- Taxes
- Cable, gym memberships, Netflix, and any other recurring service bills that you aren't planning to cancel
- Your cell phone bill
- Any fees and dues associated with the kids' memberships, programs, and clubs
- School fees or the cost of school
- Any expenses associated with your continuing education, if that's something that you plan to pursue after your divorce
Step Four: Check Your Entertainment Expenses
Entertainment is expensive–and chances are, you're going to need to reduce that entertainment spending for a while. Check your entertainment expenses as they stand and consider how they may need to change in the aftermath of your divorce. This might include:
- Eating out
- Going out with friends
- Hitting the movies
- Expenses related to hobbies
- Regular entertainment expenses, including Netflix, cable, and more
Entertainment is important, and it should certainly be included as part of your budget. However, don't fall into the trap of trying to cover up sadness about your divorce with entertainment expenses that will ruin your budget! This careful evaluation of your entertainment expenses will make it easier to see where you need to cut your spending in the coming months.
Step Five: Reduce Expenses
Let's face it: your married budget and your divorced budget are simply going to look different. While there are several ways you can cut costs after your divorce–you might find, for example, that you're able to make do with a smaller apartment or a lower entertainment budget, since you aren't dealing with your spouse's preferences anymore. At the same time, you may find that your shopping or other expenses are out of control. Don't let those expenses destroy your budget! Instead, look for key ways to reduce expenses, including:
- Cutting your entertainment budget where necessary. You don't really need to go out every weekend!
- Looking for ways to reduce your food budget. Can you eat out less often? Meal prep to avoid waste?
- Exploring alternatives in areas where your budget is too high. Do you need, for example, to trade in that car, with its high payment, for a less expensive one?
- Turning the thermostat up (in summer) or down (in winter) by a couple of degrees to help reduce your electricity bill.
Consider methods for reducing your expenses that you can live with long-term first. Short-term solutions can often end up costing you more in the long run!
Step Six: Calculate Where You Want to Be
Unless you're independently wealthy, chances are, your budget is going to take a heavy hit in your divorce. That doesn't mean that you and your kids can't thrive exactly as you are! Consider what you want your budget to look like in the next few years. Then, consider what you'll need to do in order to make it happen. What are your financial goals? Do you plan to:
- Own your own home, possibly again, within the next few years?
- Improve your finances so that you have more "fun money" to spend on entertainment and other expenses?
- Build your savings account so that you're able to more effectively cover emergencies and other challenges?
By carefully considering your future financial goals, you'll be able to better shape your future. Consider what it will take to reach those goals. Do you need to angle for a promotion at work? Improve your financial management skills? Go back to school so that you'll be able to pursue employment in a different area? Remember, small sacrifices now can lead to big changes in your financial future.
Making your way through the divorce process is difficult, and financial planning in divorce is critical. If you're struggling through the divorce process, make sure you have an attorney who will represent you and help guide you through the process. Contact Split Simple today to learn more about how we can help streamline the divorce process and make it easier for you to finish the process and move on with your life.
Split Simple
1624 Market Street #202
Denver, CO 80202
720-501-4600