Going through a divorce can be a life-altering experience in every way including emotionally and financially. As you adjust to your new life, one of the most important things to do is establish a budget to fit your new circumstances. Creating a budget can help you regain control of your finances and set yourself up for financial success. Continue reading to discover how you can create a successful budget post-divorce and work with a skilled Bergen County divorce lawyer for legal advice.
Why is Budgeting Important After a Divorce?
Budgeting after a divorce is essential for rebuilding your life and transitioning into your new reality. Divorce can lead to changes in income, lifestyle, responsibilities, and more. You may be changing from a two-person income to a single-income household or need to adjust to new living expenses or childcare costs.
Creating a detailed budget will give you a clear picture of your financial situation and help you track spending, reduce expenses, and prioritize your financial goals. Without creating a budget, you could easily become overwhelmed and overspend without realizing it.
How Can I Create a Successful Post-Divorce Budget?
First, assess your current financial situation. Gather information on all of your income, expenses, debts, and assets. List all sources of income you have like wages from your job, bonuses, commission, alimony, child support, etc. Then, track your monthly expenses including housing, utilities, food, transportation, loan payments, and insurance as well as extraneous things like entertainment, eating out, or nonessentials.
Once you have a firm understanding of your financial situation, set specific but realistic goals. Goals can include paying off debt, saving for retirement, purchasing a new home, etc. Prioritize your goals based on things you need or that are important to you and figure out how much money you need to set aside each month to accomplish these goals.
Next, it’s time to do some math. Take the amount of income you make every month and subtract the total expenses you have added up. If you have money left over or the sum is zero, you make enough money to afford your expenses and financial goals. However, if you are left with a negative balance then you need to make some changes.
Although it is not fun, an effective way to create a successful post-divorce budget is by reducing your spending. Go through the expenses you listed and categorize them by “needs” and “wants.” Figure out what “wants” you can cut out to ensure you are financially stable during this transitional phase.
A helpful step could be to track your spending for a few weeks. It is important to be honest with yourself about your spending so monitor the things you spend money on over the course of a month and compare your spending to the goals you have set for yourself.
Budgeting is not the most fun thing in the world, but it is essential to set yourself up for financial success and protect your future after a divorce.
