How To Budget Money After a Divorce: 7 Simple Budgeting Steps

Budgeting

March 15, 2024

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Budgeting After a Divorce

Let’s talk about how to budget money after a divorce.

A divorce is a significant and stressful event.  While the temptation might be to put off creating a budget, this might end up setting you back considerably.  

A budget can provide you with clarity and a sense that you can do this when so many things seem out of your control.

How To Budget Money After a Divorce

Seven Budgeting Steps for Life After Divorce

While I’ve never been divorced, I understand how stressful it is.

It’s important to feel like you’re in control of your life and finances. Follow these seven tips to start feeling better about your future. 

I have used these steps in my life for many years, and I promise that they work!

  1. Review Expenses: Look at all your expenses and categorize them as fixed or variable.  A fixed expense is an expenditure that doesn’t change much monthly, such as housing, insurance, transportation, and food.  Then, consider expenses that fluctuate. They are usually wants rather than needs, such as entertainment and other types of pampering.
  1. Review Income: Look at all the money you earn each month.  This can be income from work, investments, and/or support payments.
  1. Compare: Next, compare what is coming in and what is going out.
  1. Balance incoming with outgoing: Balancing your income and expenses may mean cutting out in certain areas until you get your feet on the ground. It may seem depressing, but I want you to know it will improve.  The important thing is to remember you want to make decisions now to create freedom in the future.
  1. Check-In: Ask yourself what things you truly value and what brings you joy. In a marriage, you need to consider what both partners want.  Now, you have an opportunity to define what is most important to you. Eliminate anything you spend money on that isn’t a necessity and doesn’t bring you joy. 
  1. Track: Track your spending and create a routine where you either write down or use an app to evaluate your spending.  Remember, don’t think “budget” is a “bad word.” Challenge yourself to rephrase your ideas about budgeting by remembering that a budget gives you the knowledge to make financial decisions that align with your goals. 
  1. Seek Professional Assistance: Many financial advisors specialize in helping manage money after a divorce.  They provide guidance and a sounding board for your decisions.  At the very least, do your research and learn as much as you can about finances.  Old programming where you believe “I am not good with money” is not helpful, and you know that anyone can improve their financial mindset. 
How To Budget Money After a Divorce

How long does it take to recover from divorce financially?

To recover from a divorce financially is understandably difficult, and the time frame varies depending on your situation.  

The decisions you make from the beginning are the most important factors in determining how long it will take to recover.  Get professional advice and educate yourself on ways to prevent future financial mistakes. Too often, people are focused on the rearview mirror instead of looking at how to improve things going forward. 

How do I not lose money after divorce?

To avoid losing money after a divorce, you must clearly understand your financial situation.  

If you used to let your partner handle the finances, it is even more important to acknowledge any fears about money and do everything you can to educate yourself. This may involve hiring a financial coach to guide you while you learn this new responsibility.  

Your goals should be focused on how to use money wisely to pay off any debt and create savings and freedom to live the life you want.  

If you received a lump sum of money, make sure you put aside an emergency fund for 3-6 months to create a cushion.  

What should I do with joint accounts and debts?

Once you agree on the division of assets and liabilities through a court order, divorce or separation agreement, you usually want to close out joint accounts.   

Many people don’t understand that legally. 

Most joint accounts give ownership rights to both people regardless of who put the money into the account.  In addition, both people on a joint account would be responsible for any charges or debt owing from a line of credit. 

Final Thoughts

Remember to be kind to yourself and focus on the future as you build a new financial reality for yourself.

Where you are today is not where you will be in the future. Focus on creating a budget that feels good, reflects your values, and allows you to spend on yourself without going into debt. 

Quick Videos: Try Out Values-Based Budgeting!

Find out what value-based budgeting is and why it feels so much better than traditional budgeting. You need to feel good about your budget; values-based budgeting will help you with this.

What is values-based budgeting?

How can I start values-based budgeting?

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About the Author

TIFFANY WOODFIELD is a financial coach, cross-border expert, and entrepreneur based out of Kelowna, BC. As a TEP and associate portfolio manager, Tiffany has extensive experience working with successful professionals who want to leave a legacy and enjoy an adventurous, work-optional lifestyle. Tiffany combines extensive knowledge from her background as a financial professional with coaching and her passion for personal development to help her clients create a unique path that allows them to live their fullest potential. Tiffany has been a regular contributor to Bloomberg TV and has been interviewed by national and international publications, including the Globe and Mail and Barron’s.