Aside from the emotional repercussions resulting from a divorce, one of the biggest challenges newly single people face is getting a firm grip on their personal finances. If you’re now on your own, this isn’t something that can wait too long to deal with, or you could find yourself experiencing significant financial problems in the not so distant future. As 2008 rolls around, there’s no better time to start taking better control over your money. True financial stability means much more than living paycheck-to-paycheck without planning for your future. So, if you’re open to establishing a few New Year’s resolutions relating to your financial life, here are five suggestions:  

1. Create a personal budget and stick to it in order to take total control over your monthly expenses.
2. Lower your monthly bills and start spending more wisely.
3. Better manage credit card debt.
4. Improve your credit score.
5. Create an Emergency Fund.  

Depending on your unique financial situation, not all five of these potential financial goals may be applicable, so develop a plan that meets your needs and financial objectives. Also, keep in mind that achieving the majority of these financial goals will take at least several months (or longer), so the sooner you get started, the better. By taking an active, responsible and persistent approach to taking control over all aspects of your personal finances, starting in early-2008, you’ll be able to ring in 2009 as a much more financially stable individual – potentially with a respectable credit score, more money in the bank, and the ability to live well (but within your financial means).  


1: CREATE A BUDGET.              

It’s impossible to take control over your personal finances if you don’t have a firm grip on how much money you earn, plus how much money you spend each month. One of the easiest ways to set up a personal budget for yourself is to begin using a personal finance software package, such as Intuit Software’s Quicken. The easy-to-use “Starter” edition of this software (available for PC or Mac) is priced at $29.95, and can be purchased wherever software is sold, or downloaded from the Quicken Web site (http://quicken.intuit.com/personal-finance/). Microsoft Money Plus (www.microsoft.com/money/default.mspx) is a similar, Windows-based software package for easily managing personal finances.            

Begin by carefully analyzing how much money you spend each month. Review all of your bank statements, credit card statements, bills and receipts for the past three to six months. Next, using a pad of paper, create these three separate lists:  

1. First, list all of your fixed expenses.
These are absolutely necessary expenditures that are constant every month, such as your rent/mortgage payment, alimony payment (if applicable), and car payment.

2. Make a list of your regular monthly expenses. 
These can vary each month, such as your utility bills (gas, electric, phone, etc.), as well as your cable TV and cellular phone bills, commuting expenses, and car-related expenses, etc. On this list, calculate your average monthly expense for each item.

3. Finally, make a list of your frivolous expenses.
(You’ll probably be surprised how many of these expenses pop up on your list as you review your credit card bills, bank statements and receipts.) This is money you spent, but didn’t have to.

As you create your list of frivolous expenses, pay attention to all of those small, spontaneous purchases, such as gourmet coffees, new clothing purchases (made because something was on sale), and your entertainment expenses. Now that you’ve discovered exactly how your money is being spent, determine if you’re spending more each month than you’re actually earning. One quick indication of this is if you regularly tap into your savings account or rely on credit cards to pay your monthly living expenses.

If you’re spending more than you’re earning, it’s immediately necessary to take better control over your spending and cut costs. Otherwise, you are virtually guaranteed to run into potentially serious financial problems in the not so distant future. At the same time you’re figuring out creative ways to cut costs, begin formulating an organized, monthly budget for yourself. This budget should be put in writing (or be displayable on your computer), so it can be reviewed on an ongoing basis.

You already know how much you’re earning (plus how much you receive in alimony, if applicable). Now, your goal is to use a software program, such as Quicken or Microsoft Money Plus, and potentially your bank’s online banking services, to keep better track of your day-to-day finances, while at the same time, better controlling yourself when it comes to those frivolous expenses.

Just because a gorgeous pair of shoes or a new outfit is on sale, it doesn’t mean that you absolutely must expand your wardrobe. Getting caught up in the hype created by advertising and marketing is a guaranteed way to spend more money than necessary, especially on items you don’t actually want or need. One lesson you might need to learn is to stop spending money you don’t have, in pursuit of bargain items that you have no use for. There’s a huge difference between genuine need and perceived need that’s created by advertisers and marketers hoping to sell you their products.

Sticking to a monthly budget will be easier once you adopt an organized method of record keeping (using personal finance software, your checkbook or a paper-based ledger). Going through the motions of creating a budget isn’t enough, however. You must make a conscious effort to stick to that budget, month after month. If you need help organizing your personal finances and initially creating a budget, consider sitting down with an accountant or personal financial planner for a few hours to help you get started.