Money Tips: Splitting Up? Make a Budget

    Divorce is painful in part because it makes you look to the past, focus on the minutia of a marriage that has run its course. Spending hours combing through the financial details of a life you are most likely trying to put behind you can be daunting. So why not start taking financial control of your divorce (or life!) by figuring out what your financial needs are? The word “budget” may sound like “drudgery” to you, but it can be empowering to take the time to quantify how much it will cost you to build a dignified life going forward. Budgeting can also be a powerful tool in the divorce process.

If you document your projected financial needs with detail and accuracy, your lawyer or mediator can use this information to determine appropriate spousal and/or child support payments if applicable or what you need to keep for yourself if you are the breadwinner. If you find the thought of creating a budget overwhelming, consider working with a divorce financial professional who can facilitate the process. Here are a few steps to follow when creating your projected budget:   

1. Be detailed.
If you leave an item off your budget, you won’t have an accurate record of what you need to move forward financially in your life and you could well end up with a mounting credit card bill. Don’t forget the costs of hair cuts, out of pocket medical expenses, insurance and fuel costs for your car, and summer camps and vacations for the kids, if applicable. Chances are that if you leave an item off your list, it will also be unaccounted for in your financial settlement.    

2. Don’t forget to include big ticket items that you need to replace every few years.
Your budget should factor in the annual (or monthly) cost of big ticket items like cars, computers, and kitchen appliances. For example, if you need a new car every 10 years, then take the projected cost of that car and divide it by ten. Remember to factor in inflation. This number should be included in your annual budget.   

3. Is your budget realistic?
Ask yourself if your family income and other financial resources can realistically cover your needs and that of your (ex) spouse. If so, great! If not, consider how you will cover the shortfall. Can you scale back your budget or increase your income?   

4. Break your budget into two categories: “bare-bone essentials” and “discretionary expenses”.
When a divorcing family divides into two households from one, often all parties have to cut back on their expenses. So when considering each item on your budget list, ask yourself if you really need that item to survive or if it’s something that can wait until you secure the resources to pay for it.     



Any opinions are those of Elizabeth Cox and not necessarily those of RJFS. Raymond James is not affiliated with and does not endorse, authorize or sponsor this Web site any of the other listed Web sites, or their respective sponsors. Elizabeth Cox is a Certified Financial Planner™ and an independent financial advisor with Raymond James financial services, a member of FINRA/SIPC. She provides clients with a broad range of financial services including financial planning, pre- and post-divorce financial analysis, investment management, and retirement analysis. Elizabeth Cox can be contacted by e-mail at elizabeth.cox@raymondjames.com, or through her Web site, www.divorcefinancialservices.com.