Budgeting, Beyond Spousal Support Advisory Guidelines
Budgeting household income and expenses during a divorce is so important. The SSAG only takes us so far. The Spousal Support Advisory Guidelines (SSAG) is an academic paper that was first released by the Federal Department of Justice in January 2005. The Advisory Guidelines are not a law.
DivorceMate is a widely used software tool that puts functional horsepower behind the variety of mathematical formulas described in the SSAG document.
Once a spouse has been found to be entitled to receive support, an SSAG analysis can be applied to determine how much spousal support should be paid and how long spousal support should be paid for.
However, the Spousal Support Advisory Guidelines and DivorceMate can only assist in settling the support (income) component of your new financial picture. What about budgeting for expenses?
A lifestyle analysis by Ontario Divorce Finances will help you and your spouse figure out appropriate support. You may be living the high life, but this doesn’t mean you’ll be able to continue living such a lifestyle following the divorce. Nearly all separating couples must create budgets and alter their spending habits.
This will be especially difficult if you are the custodial parent, but it can be done through a careful lifestyle analysis and wrestling that ‘lifestyle assumptions vs. budgetary realities’ bear.
Using a software developed by Ontario Divorce Financies specifically for the task, separating couples can realistically approach living solely on your own income. It may even take some of the pain and mystery out of the process.
8 Ways Budgeting Can Improve Your Post-Divorce Life
- Acts as a Roadmap. Since you are already dealing with the myriad changes that accompany divorce, establishing a budget will help you gain control of your post-divorce finances. A budget will help reveal exactly how your money is spent, as well as illustrating where money can be saved. It can also help you to better understand where changes need to be made in order to plan for the future. By constantly updating and reviewing this budget, you can be prepared for unexpected changes and needs that may arise.
- Reveals Waste. By setting a budget, it will become much clearer how a two person income is often drastically different from a one person income. Drawing up a budget will help to reveal those places where money is wasted – making you more in control financially – and will alert you to how that money can be better used on a monthly basis.
- Sets Priorities. Again, since the household income has been reduced, setting a budget will help you to set new financial goals for the future. This may involve getting a new home, a new car, or just saving for the unexpected. Setting priorities through a budget makes them much more achievable.
- Builds New Habits. Once that budget is set, sticking to it will let you get rid of those old habits that might lead to financial problems in the future. It is important to get rid of those same spending habits that existed alongside that second income. Instead, the budget will help motivate you to stay in control of your finances.
- Reduces Stress. We all know that divorce and stress often go hand-in-hand, so establishing a budget and sticking to it will help alleviate a great deal of that stress by allowing you to set firm, but realistic, financial goals and better planning for the future.
- Controls “Retail Therapy” Impulse Spending. Relying on “retail therapy” can be dangerous to a budget – especially one that has been cut in half, so making sure that you have set a budget that helps curb this is crucial. That doesn’t mean that you have to cut it out altogether – just make sure that you allocate a certain amount a month (which you determine you can afford), and stay within that amount.
- Re-establishes Savings. A divorce can cripple a savings account, so making a budget will help you to see how much money you can afford to put away each month, and push you to do so. Savings are so important – and so re-building them by establishing a budget should be a priority.
- Creates a Cushion. Not to seem redundant, but going from a double to a single income means that cushion is often non-existent. Making sure that money has been put aside for emergencies, whatever form they take, is important. That way, if the car breaks down, the house needs repairs, or school shopping gets expensive, you have the means to cover whatever is needed.