Part 2: Budgeting for Your New Life After Divorce

Divorce often brings significant changes to your financial landscape. Whether you’re adjusting to a single income, managing child support, or taking on new expenses, learning to budget effectively is one of the most important steps in creating stability and independence.

While it can feel overwhelming at first, budgeting is a powerful tool that gives you control over your finances and confidence in your future. Here’s how to create a budget that works for your new life.

1. Start With Your Income

The first step to building a budget is understanding how much money you have coming in each month. Your income could come from several sources:

• Your salary or wages.

• Child support or spousal maintenance.

• Government benefits (e.g., Centrelink payments).

• Income from investments or rental properties.

What to do:

• Write down all your income sources and their amounts.

• Be realistic—use actual figures, not estimates.

• If your income varies (e.g., freelance or casual work), base your budget on the lowest monthly amount you typically earn.

Why it matters:
Understanding your income gives you a clear starting point for managing your expenses. It’s the foundation of your financial plan.

2. Track and Categorize Your Expenses

The next step is to take stock of where your money is going. This involves listing all your expenses, both fixed (e.g., rent, utilities) and variable (e.g., groceries, entertainment).

What to do:

• Review your bank statements and receipts to identify regular expenses.

• Categorize them into fixed (essentials) and discretionary (non-essentials).

• Include irregular expenses, like annual car registration or school fees, by dividing their cost over 12 months.

Example Categories:

• Fixed Expenses: Rent/mortgage, utilities, insurance, childcare, transportation.

• Variable Expenses: Groceries, clothing, dining out, entertainment.

• Savings & Debt Repayments: Emergency fund contributions, paying off credit cards or loans.

Why it matters:
Tracking your expenses helps you identify where your money is going and highlights areas where you might be overspending or can cut back.

3. Prioritize Essential Spending

Once you’ve categorized your expenses, focus on covering your essential needs first. These are the non-negotiables that keep your life running smoothly: housing, utilities, food, and transportation.

What to do:

• Allocate funds to essential expenses first.

• Ensure there’s room in your budget for an emergency fund (even if it’s small to start).

Tip: If your expenses exceed your income, consider ways to reduce costs, such as moving to a more affordable home, cutting unnecessary subscriptions, or negotiating bills. The alternative is to find ways to increase your income.

4. Create a Savings Plan

Savings are an essential part of any budget, particularly after divorce. Building a financial safety net can help you manage unexpected expenses and provide peace of mind.

What to do:

• Start by setting aside a small percentage of your income—every little bit counts.

• Open a separate savings account to make it harder to dip into your savings.

• Work toward an emergency fund with at least 3–6 months of living expenses - to being with start with 1 month.

Why it matters:
Savings are your financial safety net, protecting you from future uncertainties and giving you greater confidence in your financial independence.

Tip: Automate your savings by setting up a direct transfer from your primary account each payday.

5. Adjust Discretionary Spending

One of the most challenging aspects of budgeting after divorce is adjusting your lifestyle to fit your new financial reality. While it can be difficult to let go of certain comforts, reducing discretionary spending frees up resources for essentials and savings.

What to do:

• Identify areas where you can cut back (e.g., dining out, entertainment, luxury purchases).

• Find creative, low-cost alternatives for activities you enjoy, like cooking at home or exploring free local events.

Why it matters:
Small changes in discretionary spending can have a big impact on your overall budget, allowing you to redirect money toward your financial goals.

6. Use Budgeting Tools to Stay on Track

Once your budget is set, the next challenge is sticking to it. Fortunately, there are plenty of tools available to help you monitor your spending and stay on course.

What to do:

• Use apps like YNAB (You Need A Budget) or banking apps to track your spending in real time.

• Set weekly or monthly spending limits for different categories.

• Review your budget regularly to ensure it still reflects your needs and goals.

Why it matters:
Budgeting isn’t a “set it and forget it” task. Regularly reviewing and adjusting your budget helps you stay on track and adapt to any changes in your financial situation.

Why Budgeting Matters

Budgeting is about more than just numbers—it’s about taking control of your life after divorce. It empowers you to make intentional choices, prioritize your needs, and build a stable foundation for your future.

Remember:

• It’s okay to start small. Even tiny steps toward budgeting and saving make a difference.

• Be kind to yourself—adjusting to a new financial reality takes time and effort.

• As you monitor your spending and understand your actual costs - you’ll get better at budgeting and knowing what to expect.

• Your budget is a tool for independence and growth, not a limitation.

In the next post, we’ll explore how to navigate superannuation and property settlements—two key aspects of securing your financial future after divorce.

If you’d like some help setting this all up, please contact me - I’m happy to have a discussion, at no charge, to get you started.