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Can This Divorcee’s Finances Be Saved?

An Expert’s  ‘Spending Plan’ Comes to the Rescue

By Elizabeth Lewin

Q: I am recently divorced. My lifestyle will not be the same, and I know that I’ll have to reduce my expenses. I have avoided dealing with my finances. Where do I start?

A: "Downward mobility is a fact of life for many divorced women," says Beverly Tuttle, CEO of Connecticut Consumer Credit Counseling Services. "We see many recently divorced women who have problems dealing with their current financial reality. They don’t want to admit that anything has changed. They want to live and spend the way they used to, trying to keep up a standard of living they can’t afford. They are in denial, avoiding the reality of their particular situation. They don’t want their friends, especially those who are still married, to feel sorry for them. Some want to prove to their ex-husband that they are doing great without him."

By putting your financial life on paper, you become aware of what you are responsible for. "My husband had spread sheets," says Lorraine. "He counted every nickel and dime and knew where every cent went. I cringe when I hear the word ‘budget.’ I associate that word with scrimping and sacrificing."

So, let’s forget the "B" word. Everyone, including myself, hates it. Instead, let’s use the terms “cash flow” and “spending plan.” You are not going to be able to get away from the paper work, so think of it as a tool to enable you to have financial control.

You will need to keep track of your income and expenses for four to six months. After you have done this for several months, you will have an idea of your current cash flow: money coming in and money going out. You will learn where your money was spent. Then you can set up a spending plan and go forward.

Where do you start? First, figure out what income you can expect to receive: salary, alimony, child support, Social Security, pension income, interest and dividends from investments. Then figure out your fixed expenses: mortgage, real estate taxes, utilities, car payment, insurance premiums, childcare. Reviewing your checkbook can help you pinpoint your fixed expenses.

             Flexible expenses vary from month to month and include groceries, eating out, clothing, personal care, entertainment, vacation, children’s expenses, transportation, medical bills, and home maintenance. Your credit card bills will help identify flexible expenses. Cash is great but it can slip through your fingers very quickly. Where did you spend the $80.00 you took out of the ATM three days ago? Keep a pocket notebook in your purse or car. Jot down the amount you just spent in the drugstore.

Some Other Cents-ible Suggestions

·         Use round figures. Don’t get caught up in the nickel and dimes.

·         Computer programs like Quicken or Microsoft’s Money can make your life easier. These checkbook programs can track your check writing and prepare reports that detail your spending by category.

·         Focus on the essentials.

·         Work with your children, if they are old enough, to explain the importance of what you’re doing.

·         Be flexible.

·         Allow sufficient time to gather information about money coming in and going out.

·         Stick with the plan.

How to Develop a Spending Plan That

Will Save You Money

           You will not find yourself dreading your Spending Plan if you let yourself think positively and practically about your lifestyle. Once you’ve recorded all your expenses, analyze them carefully. Ask yourself, "Do I really want to spend that much of my money on subscriptions, eating out, dry cleaning?" What is important to you? What are your priorities? Any small, incremental changes in your spending can make a real difference!

Ann still empties her pockets and wallet of loose change and dollar bills, the way she did when she was a young mother. This money goes into a jar along with money found on the streets or on the floor of supermarkets. "When the kids were young and things were tight, this money paid for little treats—a dinner out, a new outfit, theater tickets,” says Ann.  “It ‘s a family joke now, but it is still fun. It pays for weekends away or flying the kids home for the holidays."

Once you have made the adjustments—by starting with small changes and working up to the big ones—you will realize how the savings can add up. And always remember, your spending plan is not set in concrete.

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Financial planner Elizabeth Lewin is the co-author of the recently published book, “Family Finance” (Dearborn Trade).  She is also the author of “Your Personal Financial Fitness Program,”  “Financial Fitness for Living Together,” and “Kiss the Rat Race Good-bye.”  Elizabeth has written articles for Redbook, New Choices, and Arthritis Today, among other magazines, and she has appeared on numerous national radio and television talk shows. 

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