Divorce, Debt, and Finances

Tips, Struggles and Successes navigating Divorce, Debt and Finances

Pre-Divorce Budgets

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Budget is not a four letter word and you shouldn't let one scare or intimidate you. Unfortunately, many of us have never created a budget, or worse yet, have no idea what our financial situation is prior to divorcing. 

If you are preparing for divorce, determining a pre-divorce budget is essential.

A pre-divorce budget gives you the information you need to plan for life after divorce. It is inevitable that your divorce will change your standards of living. A two income family quickly becomes a one income family.

You are going to have to make some adjustments, no matter what side you are on. By knowing where you stand, you can determine next steps.

Getting started is always the hardest part. There are many ways to create a budget; what's best is what works for you.

1. Create a Budget. Here are a few options to get you started:

  • Go the old-fashioned way. You can get out a pen and paper. My current husband is opposed to anything that involves the computer; budget software, automatic payments, and paperless statements scare him. So his comfort level would lie in the prehistoric pen and paper method.
  • Create your own spreadsheets. There are many options available to track spending and create budgets. Check out this post: 10 free household budget spreadsheets.
  • Use the latest software. Mint.com, dsbudget, and Buddi, are all free internet-based choices.

2. Gather Information. In order to create your pre-divorce budget, you need to account for your family's income and spending habits. The below information are some examples of what you will need:

  • check registers
  • credit card receipts
  • bank statements
  • payroll stubs
  • investment records
  • utility bills
  • insurance premiums
  • tax information

3. Organize your Budget. Next you need to organize the budget so it is useful for your divorce case and beyond. Many states have a standardized, detailed listing of expenses and income by specific categories (example document). These categories are a good guide for creating folders (virtual or otherwise) in which to store your corresponding paperwork.

  • Your pre-divorce budget serves as an important tool as you navigate through divorce proceedings. There are several reasons why having a pre-divorce budget is important:
  • Determines support. Having a standing account of joint income and expenses is necessary to determine standards of living and financial needs. Without this important piece of the puzzle you may risk not receiving the alimony and child support you deserve.
  • Includes special expenses. Do your kids attend private school, daycare, or participate in extracurricular activities? Maybe your child has special needs and medical expenses that are a major part of your household spending. These are all things that may be overlooked in the haste to finalize a divorce.
  • Reveals hidden income. Is your soon-to-be-ex self-employed, receiving bonuses, or earning commission? Sometimes these types of income are not declared and you may be shorted what you deserve based on black and white figures.

So, budget isn't necessarily a dirty word, just a little word that can mean a lot for you and your kids' future. Take the time to prepare your pre-divorce budget so you can start your new life without constant worrying about finances.

 Other Posts by Suzanne:

What Are Your Options when Missed Payments Lead to Hefty Rate Increases?

Beat the Divorce Blues

Know Your Assets

Suzanne Cramer

Suzanne is a certified credit counselor working in our Ask the Expert forums as a coach and a Social Media Specialist for CareOne. Suzanne writes for our Divorce, Debt and Finances and A Straight Talk on Debt blogs.  Follow Suzanne on Twitter where she shares the latest debt industry news and tips to keep your finances in check with her ADivorcedMom and AskCareOne accounts.

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