A divorce means adjusting to a single income, even if that income includes child support or spousal support.
We’ve talked recently about budgeting in advance, so you know what to expect [1], but if you’re struggling to figure out life on a lower income, here are some ways to manage.
Downsize to reduce spending. People often think “downsize” only means the house, but you might downsize life in many ways. However, the house is the most obvious option, because a mortgage payment is often one of the most signficant bills. You might move to a smaller home or one in a less expensive neighborhood. Plus, by moving to a smaller space, it’s likely your electricity, water, and gas bills will decrease as well. You can also: Reduce your other spending. Even if you don’t move, you can find ways to cut back on bills in the short term so that you can thrive in the long run. This may include cell phone bill, groceries, and dining out.
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- Rent instead of buying. When you rent, you allow for your family to be ready at the drop of a hat to pack up and move in case something changes. This approach will enable you to plan for the future in a way that makes you ambulatory.
- Cut back on recreational and pleasure spending. The absence of impulse buys can provide you with savings in the future.
- Liquify assets. Anything that is worth more than what you currently owe on it can benefit you substantially. Selling a house, car, boat, etc. can provide you with thousands of dollars that can help you eliminate debt you may have acquired during the divorce process, or even from before.
- Swap out your newer car for a used version. You’ll either reduce or eliminate your car payment. Of course, you might want to keep the new one to keep maintenance costs low, but this can make a difference if things are tight.
- Create a budget [2] and stick to it. Budgeting is crucial because your finances and staying afloat is going to be at the forefront of your mind. When you budget, make sure you strictly stick to your plans. There are many online budgeting applications.
- Don’t skip saving for the future. Whether it’s a few bucks in your savings account each month or your monthly contribution to a retirement plan, don’t stop planning. As the founders [3] of our workshop always say, “A man is not a financial plan.” You need a plan so that you don’t have to work forever or rely on others for your care.
Other Tips
- It’s OK to turn to aid options such as governmental and nonprofit agencies. That’s why they exist.
- Add a stream of income. Consider finding a way of earning money that doesn’t require as much work as your regular job. You might sell handmade goods online, for example. Not everyone can do that or sell makeup on the side, but it’s worth checking into if you feel comfortable with the idea.
- Surround yourself with friends and family who support you. Your stress levels will likely increase if you’re watching every penny. Make sure you have people around you who can bring a smile (and maybe dinner) to your life once in awhile.
You don’t have the time to wait around before taking the reigns of your finances. Ask our Certified Divorce Financial Analyst [4]™ during the next Second Saturday workshop how you can plan for the future.