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Divorce means now you’re the CFO of the household.

That may be a change from when you were married and one spouse may have assumed much of the household financial responsibilities.  Think of it as an empowerment opportunity to do financial things your way.  Now, your money will be a reflection of your priorities.  It’s not as difficult as you might think.

Reset With Confidence

Your budget is a means of financial control so let’s break up your budget into more easily manageable pieces;

  • Needs (50%)
  • Wants (30%)
  • Savings/investments/debt payoff (20%).

Think Monthly

Also, although we generally express our compensation in annual terms (“I earn $x per year”), we pay bills monthly so think monthly and budget monthly.

Think In Terms of After-Tax Money

You may earn $80,000 per year but that’s pretax money, not how much you’ll have available toward a monthly budget.  You may deduct medical insurance and income taxes from your paycheck (if that is purchased through your employer).

If we assume 30% of your paycheck might be consumed by medical/dental insurance and withheld income taxes, then you might approximately have $80,000/12 months = $6,667 gross available per month.  Less 30% for withheld income taxes and medical/dental insurance = $4,667 in after-tax money, available to spend on your monthly budget.

$4,667 x 50% = $2,334 to spend on needs.

$4,667 x 30% = $1,400 to spend on wants.

$4,667 x 20% = $933 to spend on savings/investments (or debt repayment).


These are the first bills you must pay each month.  They include housing, utilities, food, transportation, insurance, etc.  These should comprise no more than 50% of your monthly after-tax budget.

Know your numbers.  How much do you spend on each per month?  One of the most important quotes for managing was spoken by Peter Drucker, a management consultant.  He said:  “if you can measure it, you can manage it”.  Expense reduction is your goal when you’re giving your budget a fresh look.  The less it costs to live, the less financial stress you may have.

You may be surprised how much you can save once you start looking closely at your buying habits.  Products and services are constantly changing.  When was the last time you thoughtfully critiqued your own buying habits?

  • When was the last time you comparative shopped for gas, auto insurance, and a reliable mechanic?
  • Could you get a lower interest rate if you shopped for a new credit card?
  • Could you save money by joining a wholesale club?
  • Is there a lower cost mobile phone plan than your current plan, perhaps with a new phone?
  • Is your current home the right fit for your life going forward?


Once you can pay for your needs, the pressure is largely “off”.  Follow the same financial critique for the products and services you buy that can be classified as “wants”.

Saving, Investing, and Debt Reduction

Many Americans are making progress paying off debt by allocating their 20% toward education debt, credit card debt, and other forms of debt.  As those debts are paid off the monthly surplus you create can be invested toward your retirement, improving your credit score, and altogether improving your financial position.

Managing your finances post-divorce is a means of taking control over this important aspect of your life.  Once you start to look for ways to get more for your money for one item you’ll start to improve how you buy other items.  You’ll become a more savvy, informed shopper, creating an efficient monthly budget that works for you.  Remember, for every $1 you save this month you’re saving yourself $12 per year and more beyond a year.

Your new budget will become your new habit and can help you confidently do more from there.