Tag Archive for: budgeting

Post-Divorce Budget

Transitioning from a dual-income household to a single-income household after a divorce calls for accurate and detailed expense tracking. Figuring out your post-divorce budget is critical for living within your means and avoiding financial hardships. 

Our team will work with you on your post-divorce budget. This budget will serve as a guidepost for when we negotiate alimony, child support, and the division of assets and debts.  

How do you budget for your post-divorce life on a single income? Take these steps so you do not struggle financially.   

Gather Accurate Information Regarding Monthly Income and Expenses

As we prepare a strategy to negotiate, we will ask for ALL of the details of your anticipated post-divorce budget, including a detailed breakdown of your monthly income and expenses. We will use pay stubs, investment income, and any other incoming cash you receive. If you do not regularly track your expenses, then we will ask you to track receipts and go through credit card statements. Typical expenses can include:  

  • Rent or mortgage payments
  • Utility costs
  • Groceries
  • Transportation
  • Existing loan payments
  • Personal care
  • Entertainment

Sometimes we talk about adjusting lifestyle expenses so you live within your means, possibly just in the short term, so you can reach your post-divorce financial goals. 

Consider Your Children’s Expenses

When you share children with your ex, the cost of caring for them becomes vital for determining alimony and budgeting properly. You and your spouse will both share financial responsibility for your children based on the number of overnights the children stay with each of you. Think about how much you spend on your children each month. These costs may include:

  • Daycare programs
  • School lunch plans
  • Extracurricular activities and hobbies
  • Tutoring programs
  • Medical care 

Your lawyer can negotiate a settlement based on your custody agreement so your children are cared for in a way that is financially reasonable for both parents. 

Plan for Educational Costs

No matter how old they are at the time of your divorce, it’s important to include college tuition agreements for your kids in your settlement. Figuring out a plan for your child’s education in advance can save you and your co-parent financial headaches down the road and ultimately set your child up for a successful future. 

It’s not just children’s educational costs that come into play. Do you anticipate taking some courses or earning a degree so you can bring new skills into the workforce? Research the cost of advancing your education and account for this in your post-divorce budget. 

Set Aside Emergency Funds

An important part of financial planning after divorce is preparing for the unexpected. What would you do if your car suddenly broke down and you had to pay thousands for a new one? Would an urgent medical crisis put you into debt?

Establish an emergency savings account and commit to putting a little bit in it each month. This account will build over time, so you eventually accrue enough to cover six months of your living expenses. Having this safety net will give you peace of mind should you lose your job or face some other financial hardship.

Team Up With a Trusted Divorce Attorney

Creating a post-divorce budget will help you move on from your marriage and be financially independent. Approach this process with the help of Karen Ann Ulmer, P.C. Contact our family law firm at (866) 261-9529 or submit our online form to schedule a consultation.

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Post Divorce Finances – Wrapping Up, Moving Forward

After your divorce you will have a new life to build. This may include finding a new place to live, transition your children to their new lives between homes, and becoming accustomed to your new home. While your emotions may be running high and you are excited about your future you need to be vigilant in establishing your own credit and gaining financial strength.

1) Know your credit score. Checking your credit score will give you a benchmark of your current financial state of affairs. Your numerical score will show you if you have work to do to increase your attractiveness to lenders. As you go out and apply for credit – a car loan, mortgage or even find an apartment to lease your credit score will be checked. Poor credit can significantly limit your ability to borrow money. In addition to knowing your credit score your credit report will also display accounts are open in your name as well as any derogatory information that might not belong to you so you can work on repairing it.

2) Close joint accounts.

You and your spouse probably had many joint accounts open such as checking and savings, investments and even debt (credit cards and lines of credit). Dividing these accounts will be handled during the divorce process but it is important to make sure that they are closed. If they are left open both parties have the ability to still use them and accrue debt in your name, which could be problematic for your credit.

3)  Open your own credit

You will need to establish your own credit as soon as possible. This can be as simple as low-limit credit card. Charge items and services to this account and make payments every single month. This should have a positive impact on your credit and demonstrate your ability to pay your bills.

4) Create a budget and stick to it

Living on one income can be difficult so it will be important to know how much you are spending. Establishing a budget will help you track your expenses and ensure you do not go over budget. Have a plan to pay down debt, put a bit of money into an emergency savings account and also some money for entertainment if you can afford it. Being responsible now will lead to great rewards for you in the future.

5) Pay down debt
While you may want to put money away into your savings account it is wise to pay down your debt as quickly as possible. There are many options to do this and you can find a plan that is right for you. Try to send in a little more than your monthly payments each month and also cover the cost of interest charges.

Stepping out on your own financially can be an overwhelming experience. We help you set-up your financial future and as you step into the preparation it is important to move wisely to protect yourself. Put professionals around you for guidance and always keep your eye on establishing security for yourself. Most importantly, make wise and prudent decisions to build yourself the security that you need.

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