Budgeting After Divorce – When Two Incomes Become One

Not only is a divorce emotionally draining, it also creates a huge strain on your finances. After all of the legal expenses, moving expenses and a host of other divorce related expenses, you are going to be out of pocket. After enjoying the luxury of two incomes, you will need to cut your costs and make some major adjustments to your spending habits. Here are some tips on how to budget after a divorce in Australia.

List all current income sources

You may have one main job but receive money for consulting work that you do on the side or child support. List all your sources of income and an estimate of the amount of money that you know you have coming in every month.

Make a list of your monthly expenses

Record your monthly expenses via a household budget calculator, you will find that there are things that you can eliminate. If you own a car, but it is cheaper to take public transport to work, do so. If you eat out for lunch every day, start taking packed lunch. If you go out with friends twice a month, reduce it to once a month. Whatever is non essential on your list of expenses, get rid of it.

Start looking for ways to make more money

You may have some talents that you haven’t used in a while. Well this is the time to get creative, if there are things that you know you can do to make extra money go ahead and do it. If you can write, start freelance writing, if you can sew, start making clothes, if you are a good handy man, start getting paid to fix things. Whatever talent that you have, allow it to bring you a second income. You can also get a second job in the evening for a while.

Don’t get into any more debt

It may be tempting to get a new credit card in Australia, or increase your overdraft instead of adjusting your budget. This is not a good idea and will lead to a vicious cycle of debt that will be difficult to get out of.

Changes don’t have to be permanent

Don’t get too emotional about cutting out so many of the things that you enjoy, the changes to your budget don’t have to be permanent. Once you have found a way to increase your income, you can slowly start to reintroduce the things that you had eliminated.

Have you recently gone through a divorce and had to adjust your budget? Comment below.

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How to Start a Budget When You Land Your First Job

Starting a budget isn’t that tricky and it’s a great way of getting a head financially.

Congratulations! A first job is a big thing. Take your best friend out for an ice cream, buy your mother some flowers, then start a budget.

Starting a budget now will do three things:

  1. Help you establish good savings habits, which you will have for the rest of your life.
  2. Gets you building wealth early, so you get maximum returns from compounding investments.
  3. It puts you in a better position to do some of the ‘big things’ later in life. You know; have children, travel around the world for a year, start a business, buy a house.

Don’t worry either, a budget doesn’t have to be complicated or restrictive.

All you need to do is pick some goals and figure out when you want to achieve them. Here are some simple steps to get  you start on your budget:

Set yourself some goals.

If you already know you want to quit your job one day and travel around the world that is your goal. Work out when you want to do it and how much it will cost you. You might have multiple goals, that’s fine.

Figure out how much you need to save each week.

You already know how much you will need and when you need it, so simply divide the total amount by the number of weeks left until your goal date. This is how much you need to save each week.

Set up automatic payments to a savings account.

If don’t have one already, look for a savings account in Australia with low/no fees and a competitive interest rate. If it’s possible, have employer to split your pay so some goes directly into your savings account. Otherwise create an automatic, reoccurring transfer which matches your pay cycle. Set it to transfer the amount you figured out above every time you are paid.

Choose a lifestyle that fits with the money you have left over.

A household budget planner or calculator can help you work out your expenses. Once you are saving for your goals, then enjoy your money. This is the beauty of saving first; it almost doesn’t matter what happens after that. One word of caution, though; consider unexpected expenses or once off payments. It’s good to keep a ‘backup’ amount you can use. Don’t waste money, but also don’t feel guilty about spending once you’re achieving your goals.

Once you have your budget worked out here are some simple steps to help you make it work:

  • Track your spending periodically. It doesn’t have to constantly, just do it for a couple of weeks now and then. It will help you understand where your money is going.
  • Make small increases your savings rate. Why not challenge yourself to increase your savings rate each month, even if it is only by $10.
  • Focus on what your budget is allowing you to do, not what it is preventing. Every time you save some money you are achieving a little bit of your goal.

Starting a budget when you land your first job is the best way to build good saving habits and get the most from compound interest. Don’t put it off. Set some goals, save first, then spend.

Checkout our budget tool on our website. www.savings.com.au/calculators/budgeting-tool

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