While separation and divorce are emotionally painful, the real challenge often sets in when you experience the financial reality check- realizing that what you could afford as one family is no longer an option now that the family income has to support two separate households. Simple math tells us
that 1 total income divided by 2 households equals ½ of the money.

Most people want to continue to live in the same kind of neighborhood, take the same kind of vacations, and have the same lifestyle as before. This is possible, but it means that you need to either make more money, sacrifice on other items, or go into debt. Debt is just spending tomorrow’s income, and can only go on so long before debt becomes a burden that can take you even lower in your lifestyle.

So, how do you make this transition? The first step is to acknowledge the financial reality that your lifestyle will change. Denying this reality just delays the inevitable. Next you want to take a realistic view of the resources you have. Once you know what kind of after tax income you will have, then you want to start putting together your ‘spending plan’. How you are going to prioritize spending the income you have is a reflection of your values. You want to start with listing your needs, and then start filling in your wants.
Needs are the basic expenses- food, shelter, transportation, and clothing. Wants are the extras – entertainment, gifts, vacations, etc. Only you can make the tough decisions about what to cut, if you are spending more than what is coming in. You can either scale back on the expense of the needs, or you can cut back or eliminate some of the wants.

You can approach this as a challenge, or you can embrace it as an opportunity. Your attitude drives how you will make this transition. Here are some ideas that you can use:
1) Get your children involved, this can help them understand how to manage money.
2) Make a list of all the fun things you can do as a family that are free or cost very little.
3) Create family ‘money rules’ and prioritize your family’s values around money.
4) Brainstorm all the ways that everyone in the family can cut costs, such as turn off the lights when not needed.
5) If you have young children, consider buying their clothes at the second hand stores, such as Value Village.
6) Need a new TV or other item, consider buying used.

You can make this financial transition, but it may mean some tough decisions. If you are still having trouble making your spending plan work, consider consulting a financial planner or money coach for assistance.
Jackie Ramler, Divorce Financial Specialist www.divorcechoices.com