For better and worse, divorce changes your finances. Maybe your spouse spent most of your money, so you assume you’ll have more financial freedom. Maybe they were the main breadwinner and you’re nervous about how you’re going to make ends meet. No matter what, things are going to change.
That means you need a new budget. Here are a few things to consider as you plan in advance:
- You need to know what expenses you will now have alone. The best place to start with any budget is not your income, but your expenses. List out everything you must pay for. Leave off extras or things you want. Just write down things you cannot avoid.
- Remember that some expenses double. For instance, maybe you paid $2,000 per month in rent before the divorce. You and your spouse shared that. After the divorce, that cost “doubles” in the sense that both you and your ex now have to pay on your own. It will feel like your money does not go as far since you don’t share these expenses.
- Track your spending consistently. You can do this before you make the budget so that you know what you can afford to spend, but you should also do it after you create the budget to make sure you’re sticking to it. Remember that a budget takes dedication. Write down even minor purchases, like a cup of coffee.
- If the budget doesn’t work, don’t fret. Instead, get creative. People often worry when the budget makes their lifestyle appear unaffordable. Instead of feeling depressed, look at it like a challenge. Get creative and try to figure out how you can cut back on expenses — cutting the cord on cable, for instance — or how you can increase your earnings.
- Consider your divorce-related payments and expenses. Divorce requires you to split up assets, but your obligations may extend farther than that. Do you get alimony and child support payments? Do you have to pay your ex? What does this mean for your monthly budget and your taxes?
- With kids, remember that expenses change. Expenses relating to children can shift with time. Older children get involved in new activities at school. Younger children need childcare while you work. After a divorce, you have to factor in transportation costs when exchanging custody. Try to leave some flexibility in your budget to address all of these issues.
Both during and after the divorce, your financial situation is incredibly important and you need to consider it carefully. At the same time, make sure you look into all of your legal rights in California and obligations so that you know exactly where you and your ex stand moving forward.