Peaceful Divorce

So you've filled out your financial affidavit that was required during the divorce process, and chances are your budget was left lopsided. Now is the time to look at your spending plan - not months after you’ve waded deeper into debt.

Creating any kind of budget is not something most people relish - especially in the middle of a  divorce. But it is important to realize that in order to be successful, you have to be able to live on your own. That’s why it is prudent to provide as much detail as possible when figuring out your spending plan.

Start with your sources of income like salary, rents collected, consulting work or capital gains.

Next, begin to list your expenses. Some items such as alimony and child support are expenses for one spouse at the same time as being income for the other spouse. Tally up your fixed expenses like:

  • Mortgage payments
  • Auto payments
  • Auto insurance
  • Cell phone, etc.

Then, of course, come the unexpected or variable expenses that change each month:

  • Groceries
  • Entertainment
  • Doctor co-pays
  • Vacations, etc.

In comparing income to expenses, you’ll want to also include your federal tax, state tax, Social Security and Medicare taxes.

If your expenses are greater than your income, then you're going to have a deficit with your cash flow. If your income is greater than your expenses, then you have a surplus with your cash flow.

Remember, any changes you make don't have to be permanent. Many times your priorities will change. One piece of advice I tell my clients is to appreciate the difference between wanting and needing; in other words, avoid adding any new debt. Resist the temptation of using credit cards to purchase items. If you do use your credit card, make sure you can pay it off at the end of the month - or else credit card debt will begin encroaching on your new, single life.

Once you've been on your own for a while, you'll always be able to gauge how far you can stretch your income.   

I see divorcing couples every day in my practice. Some of them go through their divorces without ever putting a lot of thought into their budget, only to find out later that they did not have enough income to cover their expenses.

A little thought up front will make life a lot easier later.

Robert D. Bordett CFP, CDFA

Collaborative Practice
and Mediation Services
888 U2AGREE (888.822.4733)


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