Divorce is a life-changing event. With it comes a wave of financial responsibilities and requirements. It can feel very stressful, but with thoughtful planning and strategic decision-making, you can prepare yourself and your family for a secure financial future. Here are some financial planning tips for single parents from our team of experienced Texas divorce attorneys.
Create a Budget and Stick to It
The foundation of financial security is a budget that works for you and your kids. To get started, it’s important to be brave. Set aside all the fears and emotions that can come with dealing with money, take a deep breath and dig in.
Take stock of all of your income, including the child support or alimony payments you receive. Then take stock of all of your fixed expenses—the expenses you have to pay every month, like your mortgage or rent, electric bill, student loan payments, car insurance or school tuition.
Then, you’ll want to pay attention to your spending habits for expenses that aren’t fixed, like restaurant meals, shopping trips and entertainment expenses. You may have to cut some of these eventually, but that’s nothing to be ashamed of. Fun things like a fancy coffee can provide the joy that keeps you going through a difficult divorce.
Follow the 50/30/20 Rule
There are many different budgeting techniques, and no one technique works for everybody. A common technique is the 50/30/20 rule:
- 50% of the money you spend should be on your fixed expenses (the bills you have to pay)
- 30% of the money you spend should be on the things you want to do (like restaurants and entertainment)
- 20% of your money should go into savings
If you’re spending more than 50% of your money on fixed expenses, it’s likely that you’ll feel financially stressed. Unfortunately, it can be tricky to get fixed expenses under 50%, especially with the rising cost of housing in Texas. You can experiment with different ways to get that percentage down, from cutting fixed expenses and minimizing non-essential expenses to increasing your income.
Build an Emergency Fund
As a single parent, you’ll sleep much more soundly if you have an emergency savings account for the unexpected. Aim to set aside three to six months’ worth of living expenses over time (20% of your income every month until you reach your goal). That way, you’ll have the resources to get the support you need if something unexpected happens.
Make Debt Repayment a Priority
If you have accumulated debts during or after your divorce, create a plan to pay your debts off systematically. Any high-interest debt you carry sucks money out of your bank account every month with no return, and the interest rate can make those debts impossible to pay back unless you’re paying large amounts. So, prioritize high-interest debts and consider consolidating loans for more favorable terms.
Get Started With an Experienced Divorce Attorney
Navigating the financial landscape as a single parent can be complex. Seeking guidance from experienced lawyers like those at the Schneider Law Firm in Ft. Worth, Texas, is essential to protecting your interests. Schedule a free consultation today by calling 817-755-1852 or send us a message.