Budget

A budget is essential tool for financial survival financial survival during and after a divorce or separation. In order to build a family budget, you will need to first identify where you are currently spending your money. You can download your Daily Expense Journal Spreadsheet or as a printable PDF to assist you in your record keeping. For the next couple of weeks, keep track of every cent you spend. If you buy a coffee, write it down. If you stop for milk, write it down. If you order pizza, write it down. Well, you get the idea. You will be amazed how quickly your spending will add up. It is important to get a clear picture of how the little things eat up your money. This is the first place you will be able to begin to reduce spending.

With the help of your Daily Expense Journal and your monthly and annual bills like your phone bill, house insurance, car insurance etc, you are ready to begin compiling a family budget. To assist you in this process, download the two worksheets below.

Annual Budget as a spreadsheet or as a printable PDF

Monthly Budget as a spreadsheet or as a printable PDF

Start with your Annual Budget worksheet, and begin by listing what money you have coming in. Include all your sources of income – employment income, child support you may receive, alimony, pension income, rental income, self-employment income and any government cheques you may receive.

Section one in expenses, covers basic living expenses. Tithing is the first item on the list because the Bible instructs us to give God our firstfruits. Some of these expenses are fixed like Child Support and Alimony that likely were amounts determined by the court when you filed for divorce. Others like rent or mortgage and utilities may seem like amounts that cannot be changed. There are, however, ways to reduce your overall housing costs.

Section two looks at periodic expenses that may occur annually, semi-annually or on occasion depending on circumstances. . It will be easier to see your monthly expenses if you divide your periodic expenses by twelve and list that portion in each month’s column. For example if your house insurance comes due in June and it is $1200 you would list $100 in each monthly column for house insurance. If you do not already pay items like your insurance and property tax monthly, it may be beneficial and easier to handle if you do. Property tax can often be divided into monthly payments and added to your monthly mortgage payment by your lending institution that then remits the full amount when the tax is due.

Items like gifts and clothing, unless you keep all your receipts, you will need to use your best guess at this point to figure out what you spend. Consider everyone you buy gifts for and when while guessing the approximate amount you spend on each gift. When guessing clothing, keep in mind the changes in seasons that will generally dictate new purchases.

The final section is your other expenses. These are the extras such as restaurant meals, magazines and vacations. This is the area where you will be able to reduce spending first if need be.

Included in the last section are creditor payments and debt management payments. Because debt is such an important issue for many, we will look at how to reduce debt as a completely separate item.

After having documented your outgoing cash in the above exercise, you may find you are spending more, maybe even a lot more than you have coming in.

At the bottom of the spreadsheet, you will see a line called cash flow where it indicates a negative or positive cash flow. If you have a negative cash flow, you will need to look at ways to reduce spending. If you are in a positive cash flow, you should look for positive ways reduce debt and then to save and invest the excess cash. Chances are, you are more often in the negative cash flow or somewhere close most months of the year. We tend to spend what we have and more if we are not intentional about following a budget. Creating a family budget and sticking to it will help you live within your means and avoid catastrophic consumer debt which many find themselves wrestling with after a divorce.

If you find yourself coming up considerably short on cash flow that cannot be resolved by reducing your spending, you will need to look for ways to increase your income such as working from home changing jobs, entering the work force (if you do not already work outside the home) or some other source of income.

Now that you can see the year at a glance, it is time to break it down to a week by week basis. On your Monthly Budget sheet, you will take the amount in each month and divide it by four to find out the weekly amount for each income and expense item.

It is on the weekly basis that an envelope system can be of great benefit in organizing items you pay cash for. For example, if your monthly budget for groceries is $400, you will take $100 in cash out of the bank each week and put it in your “grocery” envelope. When you go to the grocery store, you take only that envelope and leave your debit and credit cards home. You will not be able to spend more than your budgeted amount but you can certainly spend less. Any money you are able to save each month by reducing your spending and finding good deals, can be used to reduce debt or add to your savings fund. You can organize your cash for each expense in the same way, in its own envelope.

Once you understand your current financial position and have devised a plan for financial survival after your divorce, commit your plans to the Lord. When you do, you will succeed (Proverbs 16:13). Above all, be content with what you have and trust God to meet your needs (Philippians 4:12-13).

Have A Great Story About Budgets?

Do you have a great story about how budgetting helped you get a handle on your finances? Have any suggestions or encouragement on how to stay on budget? Share it!

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