Growing up I was always figuring out ways to save my allowance and have my parents pay for items that "should be covered" by someone else. I became a master at saving up for that rainy day, watching my money grow dollar by dollar. When I was finally living on my own, I balanced my checkbook regularly and tried to reconcile every credit card receipt with each monthly bank statement.
As life began to interfere, I wasn’t quite as meticulous but I always had a general sense of how much I had in the bank and where my money was going. I was surprised to learn that many of my peers were a lot less interested in their own financial pictures, particularly when there was another party, such as a spouse or partner, who was willing to take care of the family accounting.
Many women facing divorce find themselves in a financial mess, unable to imagine how they will ever make ends meet alone. Whether it’s a fear of numbers or their spouse’s promises to keep everything under control, too many women shy away from anything having to do with the finances. After all, many women are running the house, working, caring for older relatives, planning vacations, and taking care of the children. Having someone else manage the finances relieves them of that additional pressure.
The sad truth, particularly in divorce, is that ignoring your financial situation often results in feeling helpless and afraid, wishing you had paid more attention when you were married. Not understanding how to administer your finances can have serious consequences. Whether you’re fortunate enough to have a pot of gold or struggling to make ends meet, understanding where the money comes from and where it goes is of vital importance not only for ensuring you can pay your bills but more importantly, for feeling in control of your own life.
What often scares people is watching the stock market tick up and down or meeting with financial professionals who recommend investments based on self-interest. Many women are afraid of never having enough simply because they don’t know how to look at their financial picture. I won’t pretend that managing money is a simple task, however, it can be understandable enough for you to gain clarity. Finding a skilled financial professional to work plan with is critical. The key is to know what you want from your financial advisor, not to have them tell you what you want.
The good news is that it’s really not that hard.
Here are a few tips on how to start a very basic budget after divorce:
1. Take one week of the month and save all your receipts - I mean all of them - from taxis, the public transportation, a pack of gum, the grocery shop, a manicure, etc. Ideally, if you could do this for an entire month you would have more to work with. If not, multiply the total of your receipts for one week times 4.
2. Next, set aside one monthly bill, ideally from the same month for consistency, from every company that bills you regularly.
3. If you have any financial accounts like brokerage accounts or anything that you receive income from weekly or monthly, like your paycheck, put those aside as well.
4. Now, take a piece of paper, if you’re skilled in Excel you probably don’t need my help but that’s a great place to put your information, and make 2 columns. List all your sources of income (from #3) on the left side of the page.
5. Next, list all your receipts (from #1) and monthly expenses (from #2) on the right side of the page.
6. Total each column separately.
7. Subtract the column on the left (income) from the one on the right (expenses).
8. GUESS WHAT? You now have a very rough estimate of one months’ budget!
Of course, that’s an over-simplification of the process, but the bottom line is, you can do it. Eventually, you’ll want to categorize and figure out where you’re spending, when there are extraordinary expenses coming up among many other considerations. Work with an accountant, a Divorce Coach, or a friend to add all the details you can. I provide my clients with a template that we fill out together, but you can do it yourself on a piece of paper. No need for fancy software.
Take the time now to understand how your finances work. You will find it’s a lot easier than you think!