If you have created an estimated monthly budget for your new household after a divorce, know that it will likely change down the road. You may discover after a few months that your spending estimates were unrealistic in some areas while other areas of spending were surprising or unexpected. Here are some tips for projecting your expenses realistically into the future.
Plan for car purchases.
Even if you don’t have a car payment now, you’ll need to replace your car at some point. Consider including a figure in your projected expenses for “car savings.” If you usually keep a car for eight to 10 years and think you’ll spend about $25,000 on a new vehicle, save $260 a month to buy a newer car for cash when the time comes. This means no new car payment, but you’ll have a new vehicle! If you purchase cars more often, factor in the sale or trade-in of your existing car when determining how much to save.
Keep up with car maintenance.
The older the car you have, the more money you should set aside for unexpected repairs as well as maintenance. Maintenance could include oil changes, replacing tires, fixing brakes, tune-ups and other recommended inspections. Regular maintenance will help your car last longer too.
Escrow for home repairs.
A good rule of thumb for home maintenance costs is to escrow 1 to 2 percent of the value of your home each year. A home valued at $300,000, for example, could have annual maintenance costs of $3,000 to $6,000. Costs will be on the higher end for older homes or maintenance you will hire out.
Maintenance could include:
- Replacing the roof, siding or windows
- Caring for lawn and garden, landscaping, drainage
- Fixing and replacing appliances
- Repairs to plumbing or electrical
- Cleaning and replacing carpets
- Painting
- Pool maintenance
- Small maintenance for light bulbs, furnace filters, etc.
You might not need the full annual budget for maintenance every year, but you may need more than the budget in other years.
Start a holiday savings account.
December gift giving, let alone birthday and anniversary gifting, are often missed when budgeting. Consider the gifts you give, the decorating costs and entertaining you host as part of a holiday savings account. This is one area that, once budgeted, people often decide to scale down in future years. However, if it’s a priority for you, you’ll have cash to enjoy it instead of worries about the bills later!
Vacations should be planned with cash.
If you routinely take one family vacation a year or take trips to visit friends and family, add these expenses to your monthly budget and put away cash to cover costs that include airfare, car rentals, lodging, meals, touring and shopping.
Don’t forget to budget for “big box” spending.
People often create a projected budget for groceries or school shopping expenses, but an easier way to budget is to create a “big box” category to cover shopping at stores like Wal-Mart, Target, Costco or other department/membership stores. If you find yourself shopping at these stores at least twice a month, budget for the trips and bring cash.
These are just a few of the ways you can project your future expenses and plan ahead. Other categories to consider include: health care, debt payments, charitable giving, and entertainment. Adjust your amounts as you start to see a pattern month to month, and you’ll have a clearer picture of your cash flow forecast!
The holiday season is upon us with all of its beauty, tradition and unreal expectations. It can be a stressful time for even the most grounded person. For someone newly divorced and still sorting out their new life, the challenges that the holiday season imposes can add a whole new level of stress if one doesn’t meet those challenges head on.
It’s the financial impact of the holidays that we want to address today. Buying presents, decorating and entertaining can put a big hole in your budget if you are not careful. It can turn out to be a holiday hangover that lasts until summer. Meet the holiday spending challenge head on by getting a grasp on how much you can reasonably spend above and beyond your normal day-to-day spending. Follow that up with a holiday spending worksheet listing all the added expenses, including presents, cards, decorations, groceries, clothing, charitable donations, travel and dining out. Divide up your holiday spending dollars amongst the items on your list. Now, prioritize your spending by putting the most important holiday items at the top of your spending list. Focus on purchasing the high priority items first. If high priority items, like presents or travel expenses, end up costing more than you budgeted, you will need to cut back on the low priority items.
When it comes to presents, the holidays call for cooperation rather than competition. Trying to outdo your ex-spouse, particularly with the presents, is only going to add to the holiday stress. Share with your ex-spouse what you intend to buy and the things you know your child wants. Since it is likely that your child is going to celebrate Christmas twice, each spouse might want to agree to buy smaller items. If your child just has to have a really expensive item, considers splitting the cost.
This is your opportunity to make new traditions. Look for ways to celebrate the holidays that focus on togetherness rather spending. Making cookies and homemade decorations, or helping out a charity, can all be done for minimal cost while instilling what the spirit of the season is really about.
Avoid the holiday blues by approaching them with the right attitude. Look on the bright side, now is your chance to get rid of those awful holiday traditions of your ex-spouse. Here is your chance to start new traditions that truly reflect what you value and what you want your family to remember for years to come. 
I heard an advertisement on the radio this morning for a litigating divorce attorney. This attorney discussed the importance of removing the emotion from divorce and treating the divorce itself as a business transaction. I understood her point – emotions can be messy or interfere with rational decision making. However, emotion is often the biggest part of divorce. Or, it often feels that way to clients.
How can we ask clients to strip that piece out of the process? Rather, as a collaborative attorney, I believe that emotion can be used to healthily guide clients to mutually agreeable resolutions that have long-term staying power. I embrace the opportunity to take the client where they are at – emotions and all – and guide them towards resolution. Engaging a mental health professional or coach in the process can sometimes be the greatest asset provided to clients and allow them to balance the emotions with the necessary business-like decisions.
Treating a divorce as a business transaction often leads to client’s making decisions for purely financial reasons. Using emotions and feelings of fairness or equity may lead to clients feeling as if the resolutions more completely address their needs.
For example, if one spouse cheated on the other, an emotional response of anger or vindication may lead to the hurt spouse to ask for more financial pay-out. This sort of punitive outcome is not supported in the law and rarely agreed to out-of-court. However, if the parties have a co-parenting relationship or more emotional needs, a purely business-like interaction may never address some of the underlying emotions. Facilitating a discussion about how both parties are feeling and what they may need in order to move forward may been more beneficial to the clients than any financial resolution. Some clients want an apology or a better understanding of why something happened. Others may need to put in effort to establish a shared narrative or story for others.
The finances matter – sometimes most of all. The collaborative process embraces the financial side of divorce, but also allows for a more holistic and complete approach that can address emotions, if the clients so desire. 
