Developing a Realistic Budget for Your Post Divorce Life
1. Know what income/support you will have available to you
If what you and your spouse made during the marriage wasn’t transparent or if some of this information was hidden from you it might be difficult to know with certainty what income is actually available to receive or to pay/receive support.
This is crucial to figure out! If you have to involve a forensic accountant to help you figure this out it is well worth the investment of time and money. You need to what is available to you so you know what is available to spend.
The amount of income that you will receive/pay in support is crucial to figure out in order to create your budget. Discuss this with your attorney/mediator or forensic accountant.
2. Start with a template of what you spent while you were married
Most states require you to do some sort of declaration or affidavit outlining what you spent on certain expenses while you were married. Most courts are going to try to keep you in the same “standard of living”. But keep in mind that most couples cannot continue to live the same lifestyle after divorce because there are now two households to support.
It is important to use real, historic information and not guesses or estimates. Use this as the starting categories and amounts for your post-divorce budget.
3. Figure out your future housing costs
This is sometimes very hard to predict until the status of the family home is decided. Can you afford to stay in your current home? Will the current home have to be sold? Will you be the one to move to a different housing situation? This requires figuring out the status of the family home in the overall property settlement and what you can actually afford.
If you are the one that has to move out of the family house then shop around and get a good idea of what the costs are for the different types of housing solutions. You might have to go see a few homes and prepare a couple of different budgets until you can figure out the housing solution that makes sense for the budgeted income you will have available to spend.
4. Look at each of the expense categories from when you were married to see which items can be eliminated or decreased. Be realistic!
Sadly, you may have to cut back on your spending post-divorce. Look at each of the individual categories and see where you can cut back. It’s best for you to choose which items you want to keep and which ones need to be eliminated. You have to be realistic and come up with a budget that makes sense to you.
5. What happens if your projected expenses are still more than you are expected to receive?
This is a common problem. The solutions is simple but hard to swallow. You will have to make more income (work more or go back to work) or you have to go back to your proposed budget and make some more cuts in expenses. Usually this means that the housing expenses need to be adjusted. You might realize that you have to find a different housing solution that is less expensive. Sometimes you realize that (sadly) you cannot afford the family residence and it needs to be sold.
6. There are creative ways to approach these budget issues if you are working with your spouse in mediation or in a collaborative divorce setting.
That is the beauty of cooperating and working together towards solutions that make sense to the two of you! Examples of this would be sharing of housing expenses and keeping the house in both names until the kids graduate high school and then the house is sold. There may be a temporary time period where additional support is paid until one or both of the spouses getting additional education.
You can find out more information about these topics in the 6-webinar series and workbooks titled “Succeed Through Divorce” that can be purchased at lifechangesinstitute.com.
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