Health insurance. Housing costs. Credit problems.
It is easy for financial issues to blindside you during divorce. Divorce is expensive, and that’s without including the hidden and future costs that you will face. If you are unprepared for life after divorce, you may find yourself teetering on the edge of a financial spiral downward ”“ preparation is key.
The simplest way to protect your financial future is to create a budget, a step that a shocking number of divorcees do not take. For those who do, many fail to follow the budget. Some overestimate how much money they actually have and others don’t realize how much they actually spend. Follow these tips to make sure your budget is accurate ”“ and then stick to it!
- Total all of your income sources. Your job, your second job and any other income you receive, such as spousal maintenance. Once you do, subtract any known costs you must pay, such as child support.
- Total up your recurring costs, such as your car payments, rent/mortgage and insurance payments. Once you have a list, consider eliminating some costs that you don’t need. Do you really need unlimited data on your cell phone, for example?
- Consider all fluctuating expenses. Entertainment, your morning coffee, haircuts, etc. If it is not an absolute necessity (you have a gym membership, but your new condo has a gym onsite, for example) consider eliminating that cost.
- Now that you have an accurate picture of income vs. spending, do you have income or a deficit at the end of the month? If the former, excellent! Consider putting that money into savings or a retirement account. If the latter, revisit your budget and see if you can eliminate any more unnecessary expenses.
Know this ”“ while a budget is valuable for any recent divorcee, it does not have to be permanent. Keeping yourself afloat during this tumultuous time will ensure that you have ground to stand on when you are in a better position financially.