Separating from your partner is a life-changing event that will most likely have a big impact on your finances, especially if you have children to provide for. Suddenly you find yourself facing bills, rent or mortgage payments, and all the usual costs of living with less income to meet those expenses.
Getting on top of your finances after separation isn’t easy but there are some practical ways to survive in the short-term and get ahead in the long-term. The key word here is BUDGET! It’s about understanding what your financial situation is and then carrying out changes to make ends meet.
Step 1 – Work out your expenses
Adding up your monthly income is usually the easy part but totaling your expenses takes a bit more time and effort. Gather three months of bills or, if possible, all of the past year’s bills, credit card statements, and receipts for your groceries, petrol or anything you buy with cash.
If you haven’t been keeping records of expenditure, now’s the time to start. Track your expenses over a month or two by making entries in a notebook or adding them up in a spreadsheet. Consider fixed costs like mortgage or rent, loan repayments, school fees, insurances, utility and phone bills, and childcare. Then your variable costs will include things like groceries, clothing, food, entertainment, petrol and medical expenses.
Step 2 – Draw up a detailed budget
The purpose of a household budget is to track your personal cash flow – how much money comes in and how much goes out. You can download this Family Budget Spreadsheet to input your monthly income and all your expenses. Some expenses are quarterly or annual but it can help to break these down to a monthly cost so you don’t miss anything. Now, have you got a monthly surplus or a shortfall? If it’s a shortfall, onto Step 3.
Step 3 – Review and reduce
All of us spend money on things that we want but don’t necessarily need. Take a look through your expenses and think about the things you’re prepared to cut back on. It’s not about taking the fun out of everything but simply asking yourself which things are really important to you and which your family can do without. Another thing you can do is make small cuts on lots of different expenses so that you save money across the board. Maybe you could reduce food expenses by planning nutritious but cost-effective meals, shopping at cheaper supermarkets, or buying in bulk. Take a look at your bills – can you switch to a lower plan for your phone, save on energy use in your house, or save money on insurance by paying upfront?
Step 4 – Get all your entitlements
There are various types of assistance for single parents that you may be eligible for such as Parenting Payments, Family Tax Benefits and Child Care Rebates and Benefits that help with the cost of childcare. Talk to Centrelink and make sure you’re getting all your entitlements. This can help with both the income and expenses side of your budget and bridge any gaps between the two.
Step 5 – Protect yourself and your family
While you’re getting your finances in order, you also need to think about protecting yourself and your children over the longer term. Financial shocks are even harder to cover as a single parent so it’s important to be prepared for anything that could arise. Consider taking out insurance cover such as income protection, life and trauma insurance in case something happens to you and you can’t earn your regular income. Often these insurances can be paid through your super so they don’t impact your cashflow. It’s also a good idea for single parents to make a will or update an old one to make sure your money and assets end up in the right hands if the worst happens.
Step 6 – Start a savings plan
Saving money can take time but if you get your household budget in order you can start to think about regularly putting away even a small amount of money. Think about what you’d like to save for and how much you’ll need, being realistic and giving yourself plenty of time. Look into options like asking your employer to split your salary payment so some of it goes into a separate savings account. Having a savings goal will give you something to aim for and help you plan for the longer term.
Want to talk?
Sydney Law Group is an experienced team of family lawyers who are passionate about achieving the best possible legal results for our clients. We exist to help families through difficult times and guide you to a positive outcome without extra emotional or financial stress. We’re on your side, every step of the way.
Call us for a confidential chat on (02) 8819 4399 or contact us by email. We’re here to help.
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Disclaimer: This article provides general information of an introductory nature and is not intended and should not be relied upon as a substitute for legal or other professional advice. While every care has been taken in the production of this article, no legal responsibility or liability is accepted, warranted or implied by the authors or Sydney Law Group and any liability is hereby expressly disclaimed.