Splitting up with your partner is often a life-changing event, and that includes your finances. Suddenly, your income and outgoing expenses change radically. Budgeting for your new situation can often be a real challenge, and you might find yourself asking “why is there so much month left at the end of the money?”
Good financial planning can help by providing some necessary financial stability. Consulting a professional for financial advice can provide additional support for planning how to live on your new budget over the long term.
Make your budget:
- Record all your income and outgoing expenses: make a list of all your income sources (e.g. salary, child benefits, support payments) and expenses (e.g. rent, instalment payments, living expenses).
- Separate the list into fixed and variable costs: fixed costs do not change (such as rent or insurance policy payments), variable costs can be adjusted (e.g. budgets for leisure and clothing).
- Build up an emergency fund: it’s important to have savings on hand to pay for unexpected expenses. Ideally, you will have savings equal to the amount of income you earn in three months. This money should be easy to access in an emergency.
- Organise your priorities: start by budgeting for essential expenses, then add a realistic budget for variable costs. Make sure you review and adjust your budget regularly.
Make a budget: apps and digital tools
Many banks offer apps and web-based tools that can help you as you create and stick to your budget. These resources help you keep an eye on your income and expenses, and provide support when planning savings goals. Ask your bank for advice on what options are available.
Tips to prevent overspending
Use physical envelopes, or digital alternatives such as subaccounts in your online banking portal, to sort your money into expense categories. This will give you better control over your expenses.
It is important to regularly analyse your expenses and cancel subscriptions or memberships that you are no longer using.
Write a shopping list and plan your purchases in advance to avoid unnecessary impulse buys.
What else do you need to consider?
Of course, you need to think about more than just your budget after a divorce or separation. For example, your tax category may change, and there may be support payments to be calculated and taken into account. You will also have to review and adjust your insurance policies (e.g. third-party liability, health insurance) and retirement provisions. As described in our previous article on the subject, you may also have to close a joint account or remove power of attorney for individual accounts.
Take advantage of your bank’s consultation services after a divorce or separation. As part of a financial consultation, they can analyse your new financial situation, helping you to set new goals and develop strategies for securing your financial future.
