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Budgeting After Divorce

From a financial perspective, divorce is a process that splits one household into two. The result of setting up your own home after divorce often requires multiple lifestyle changes. You may have to sell your house and move, perhaps you got the house in your settlement and you now must pay the mortgage yourself, or you could be paying alimony and child support.

Whatever your circumstances, now that you’re single, it’s time to create a budget that reflects your new life. Here are eight tips:

1. Concentrate on basic expenses

First, list your most essential needs, any expenses dictated by your divorce settlement, and their monthly cost. Be sure to include your mortgage or rent, food, utilities, transportation, insurance, child support, and alimony. Tally these costs, and you have the minimum amount of money you need each month.

2. Figure out how much money is left

Once you know how much you spend each month on basic needs, look at your paycheck to determine how much money is taken out for taxes, social security, and other payroll deductions. Subtract this amount from your yearly salary and divide it by 12; this is your monthly take-home pay. Now subtract your essential expenses from your monthly take-home pay, and you’ll have the amount of money available to you each month.


Hopefully, you have a comfortable margin, so you’ll be able to save, invest for the future, and enjoy some non-essentials. But, if there isn’t a lot left over, there are steps you can take. 

3. Track all expenses

Before creating a budget, it’s vital to know exactly where your money is going. Keep a notepad with you for at least two weeks, preferably a month, or use the Notes app on your phone to record every purchase you make. This may seem tedious, but you could discover that you’re spending more than you realize on incidentals. If you’re grabbing coffee every day on the way to work or eating lunch out often, you’d be surprised how quickly it adds up!

4. Reduce or eliminate non-essential expenses

Once you know where you’re spending every cent, you can determine where you can cut back on your spending. Look at how much you spent on extras like eating out, clothes that aren’t necessities, and cable/streaming services. If you spend $200 a month on clothing, could you cut back to $100? Could you cut one of your streaming services or get rid of cable? You can make small cuts that will add up to real savings throughout the year.

5. Bring in extra money

There’s never been a better time to start a side hustle because the opportunities are plentiful. You could start a small pet-sitting service, deliver groceries or food from restaurants, teach English online, or find a part-time gig (if they agree to work around your full-time job). If you have a career that allows it, consider doing freelance jobs after work.


You could also take an honest look around your home and begin selling things you’re not using. You could have a big garage sale or sell through Craigslist or Facebook Marketplace.


One last thing to consider is downsizing your housing. Now that you’re single, you may have extra rooms, and switching to a smaller place could put serious money in your budget each month.

6. Create a budget

Now that you know how much money you bring home, how you’ve been spending your money, and how you can bring in extra cash if needed, it’s time to create a written budget. You’ll be a way into this process because of the steps you’ve already taken, but if you need a guide, a helpful budgeting strategy is the 50/30/20 rule:

  • 50% of your income is for your basic needs

  • 30% of your income for extra wants

  • 20% of your income for savings and paying off debts


You’ll want to revisit your budget at least quarterly and adjust it as your needs change and you pay off debt. Remember to keep your budget visible so you follow it. Adhering to your budget will lead to healthy spending and saving habits and a more secure financial future.


7. Pay yourself first

Even if it’s just a few dollars a paycheck at first, if you’re not already, get in the habit of saving. Your priority should be to create an emergency fund if you don’t have one. A safe amount to put in your emergency fund is three to six months of expenses, so if you lose your job or something else unexpected happens, you’re covered until you’re bringing in money again.


Next, begin saving for your future. If you have an employer-sponsored retirement plan, contribute as much as possible. If your employer matches your contributions, try to invest at least to their contribution level.

8. Talk to a financial advisor

Creating a budget, figuring out your cash flow, and developing a debt repayment strategy can be overwhelming. An experienced financial planner can help you create a budget, offer ideas on how to save money and pay off debt, and offer guidance on how to invest. Working with a professional can help hold you accountable if you’ve had difficulty sticking to a budget in the past.


You can schedule a free, no-obligation consultation with our team of experienced financial advisors here.

8 tips for creating a financial plan to support your new life
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