When your relationship breaks down your head gets very, very busy.
In addition to all the emotional stuff, there’s a lot of practical things to consider - money being the most important one.
But how can you take control when you’re facing life on your own and, in most cases, with a lot less in the bank?
Julia Hasche is a mentor for single mums. In a recent interview on her podcast, Single Mums Survival Guide, her guest Katherine Hayes (a financial advisor fromTiffen and Co) said the best thing you can do is start a budget.
“A budget doesn’t mean your money issues are taken care of, it just means you have a template to work from that you can adjust as you go along,” Katherine says.
So how can you get started?
Make some time
“Find a couple of budget tools that work for you," says Katherine. "Put aside an hour, get some bank statements and pull together a budget. ASIC's MoneySmart website have a free budget that you can tailor for you.”
Once everything is on paper, then you can work out what you can cut out.
“At the end of the week/month/year, you’ll also be able to see which areas are ‘in the red’ and you can quickly address them. For each item on your budget, ask yourself: Is this vital to who I am and what I want to be doing?”
Katherine says people mostly go over their budget because of one-offs or splurges, so setting up separate bank accounts will help you get around this.
Start by dividing your money into sections.
“Start with an account that your pay goes into. From there, anything more automated like home loan/rent/mobile phone comes out direct debit . You might also use this card for things like food, fuel - things that relate to the household.”
Then separate the remainder into three other accounts:
1. Guilt-free ‘me’ money
This is an account where you transfer money from your main account. This should only be a debit card, no credit. For most people it’s for stuff you ‘want’ but don’t need, like takeaway coffees, or the hairdresser.
“It’s guilt-free money. As a parent, you’re usually the last person on the priority list. Knowing you have some freedom makes you feel better about sticking to the budget,” says Katherine.
2. Big bills account
This is for stuff like car rego, servicing of your car, body corporate fees, rates and utilities.
“Work out your annual expenses and then add a 10 percent buffer. If you can, kick it off with a balance or build up a buffer first, that way you don’t get a lumpy cash flow in your bank account. And also, you have enough money to cover the big bills.”
3. Savings account
This account is for rainy days - like holidays, leasing a car, Christmas funds, or savings for a balloon payment.
“With savings, it’s optimum to break this into two separate accounts - one for short-term savings adventures like holidays, and the other one is for long-term expenses, like an investment property. Obviously this second account will take some time to save up, but even if you make a tiny start, it will make all the difference.”
Listen to Your Family, Your Money: Are you covered?
Got a terrible sinking feeling now you’ve done your budget?
Numbers on a spreadsheet can leave you feeling a bit anxious. Katherine says if that’s true for you, it’s time to think about ways to cut spending.
Use this filter to sort things out:
Identify needs versus want - what could you live without for a little while?
Can you reduce an expense? Gym memberships and Foxtel come with options to drop down to a lower package. Check them out.
Make simple changes like carpooling to avoid extra fuel and tolls on the road, every bit helps!
Shop around for better deals on stuff like car and home insurance or mobile bills. Ask yourself if you really need the plan that you’re on?
If you have non-home loan debt like a car or personal loan on a really high rate of interest, bundle them into the mortgage if you can afford to.
Next, try some simple ways to save
Get really clear on your goals, says Katherine. “I want to have X amount in savings by Christmas. Make sure it is achievable, and something that you can track. Make it an automatic transfer."
Here are some more top tips for gettings those savings growing:
1. Plan things better. Instead of using Crisco etc, you'll find that if you put that same money in a bank account, you’ll have far more money in your pocket and get things you are actually going to eat. Make sure you are getting what you really want.
2. Automate your cash flow as much as you can with options like direct debit - this takes away having to even think of it and ensures payments are made on time.
3. Sometimes there’s opportunity to earn extra income by taking on a few new habits. For example, shift workers may be able to ask for shifts where there are penalty rates.
4. Add an extra half hour to the working day, if the option is there. This small amount of extra income can add up to a lot!
5. Ebay or sell stuff you don’t need. Even if it’s not a huge amount, every cent makes a difference.
6. Put really good habits into place, like a budget, and stick to them!
7. Take on a bit of babysitting of other people’s kids - this is a great way to earn a little cash while you care for your own children.
8. Think of other small jobs you may be able to fit in to your usual day-to-day routines. Love walking? Why not offer a dog walking service or do a letterbox drop? If gardening is your thing, offering small services like weeding and trimming can bring in some extra income.
9. Got a payrise? Hooray, you! But to really make the most of it, don’t adjust your lifestyle - pretend you don’t have a payrise and make the payments directly into the savings account.
Take a deep breath
As with anything in these first few months of separation or divorce, take your time and be kind to yourself.
While these steps may feel overwhelming at first, getting organised will really help you gain a sense of control over some aspects of life.
Who knows, you may even learn something along the way?
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