One of the greatest challenges of divorce is money. As a newly single parent, you might be overwhelmed, as I was, with more bills than you can afford. I can remember skimping on afterschool snacks and being generally in a very rotten mood (but trying to slap a smile and happy-go-lucky demeanor on my face for the kids) toward the end of every month. That is until I discovered the solution.
Cutting out cafe lattes and afterschool cupcakes will not improve circumstances at all, and the fact that you are trying to get things under control by eliminating all the fun just makes life sour. However, getting your big-ticket items in a reasonable range will almost immediately shift your life.
When you employ the 50% to thrive and 50% to survive budget, your basic needs will be manageable and you will have room in the budget for enjoying your kids. This requires brave choices, but the goal is that right after divorce, more than anything, you need a springboard that allows you to create a better life. If your ex is very wealthy and happily keeps you living in the lap of luxury, then you are lucky. For the rest of us, who are living on more moderate means, the Thrive Budget can be the ticket and bridge to redefining where we live, who we are and how we interact with our kids.
The Thrive Budget
My Thrive Budget is outlined in greater detail in my book You vs. Wall Street: How To Grow What You've Got and Get Back What You've Lost.
10% of your net income should go on auto-deposit into your 401(k), IRA, health savings account, etc. First. It's tax deductible. Pay yourself now, or pay the IRS later. If you invest right, your nest egg should earn 10% while you sleep, meaning your money will be worth more than your salary in seven years and will out-earn you in 25 years.
Tithe 10% to charity. Fuel your favorite cause with your cash, take the tax write-off and reap the benefits of helping your community and networking with others who have like-minded goals. Pay your favorite charity now, or pay the IRS later. The best, highest paying jobs that I've ever had came from the relationships that I developed through my charitable giving. Sometimes it's hard to think of charity if you feel like you need more money. But the ability to think this way will put you in the position to surround yourself with a new network of friends and possibilities that you will never have access to otherwise.
Education is the single highest correlating factor with income. Surgeons make more money than dishwashers, and surgeons who have educated themselves about investing make greater gains than those who invest blindly (or not at all). According to the Bureau of Labor Statistics, full-time workers without a high school diploma earned $438/week on average in the fourth quarter of 2010, compared to $1,139 for a Bachelor's Degree, and $3,383/week (for male) professionals with a master's or higher. A very high profile CEO, who ran a publicly traded company worth more than $10 billion, focused on education right after divorce to achieve such heights. (His job before was coaching a football team, at a salary that was a very small fraction of his salary today.) His kids are very glad that he did.
Health is wealth and having fun is one of the best antioxidants available. You can't earn a great living if you can't get out of bed. If you make time to do things you enjoy, the time you spend with your children will be more pleasurable for them and for you. It's all about balance.
Double your fun budget. Rethink where your money is going, not by adding up receipts, but by having a plan. I take 10% of my income out in cash and spend it until it's gone. Then if the kids want something, like to see a movie or eat out, we all know that we have to wait for the next paycheck to do that. I also put some of the big-ticket items in the "fun" budget, whether it is a vacation or to beautify our home, setting aside another 10% of the income for this.
Some people say, "I spend my fun money on my home." That's cool, but then stop complaining that you don't take vacations and start enjoying your home more. Can you have more sleepovers for the kids? Family movie night? A barbecue and three-legged race in the backyard? A monthly yoga potluck dinner with your friends? If you're not having fun, your retail therapy isn't working. And if your home is costing you an arm and a leg, then it's no wonder that you are getting buried by your bills. Get creative about reducing your big-ticket items and you will find yourself with a lot more dough to thrive on.
Think this is impossible? Guess which ethnic group is the highest income earner in the U.S.? Before I reveal the answer, I want to point out that this group was one of the lowest wage earners in the U.S. at the turn of the last century. How did one ethnic group soar from the bottom to the top of the charts so quickly? By focusing on education and dramatically reducing basic needs expenditures. If two families had to live in a two-bedroom apartment so that the kids could go to medical school, they did that. And now, American Asians make a weekly income that is 7% higher than whites and 35-50% higher than the weekly income of blacks and Hispanics in the U.S., respectively. (source: Bureau of Labor Statistics, January 20, 2011) http://www.amazon.com/You-vs-Wall-Street-Youve/dp/1593155514/ref=sr_1_1?ie=UTF8&s=books&qid=1259084953&sr=8-1
Remember back in the 1970s when malls were created? By teaming up to put everything you need in one place, all of the retail stores benefitted. Coachella (and Woodstock before it) puts all of the greatest bands in one spot for an entire weekend. What can you do to partner up and create a win-win for everyone? CoAbode.org helps single mothers partner up to live together, a plan that can reduce expenses and create more time for both moms. (Sorry Dads: this service caters to Moms only, but you could do this on your own. Remember that old TV show and film, The Odd Couple?) Whether it is carpooling to school, a babysitting co-op, tapping your parents once or twice a month for a night off or house-sharing, get creative about getting help.
The end of a marriage should not be the end of your dreams. In fact, J.K. Rowling, the impoverished, single mother who went on to create Harry Potter and become richer than the Queen of England puts it, "You will never truly know yourself or the strength of your relationships until you are tested by adversity. Rock bottom became the solid foundation upon which I rebuilt my life."
Stuck in a rut? 21 days is all you need to create new possibilities. If you have never tried a 21-day mind/life shift, there is no greater way to expand your possibilities and your thinking. It might be a 21-day summer schedule that includes a whole different routine and focus than you employ during the school year with your kids. Why not try more fun in the great outdoors (since so much of school is focused on inside learning)? Or turn off the television. Or walk to school instead of driving. Try something new, and give it a chance to stick by trying it for at least 21 days.
The famous attorney and women's advocate Gloria Allred used house-sharing when her children were young, and so did I. J.K. Rowling received public assistance when she was creating one of the most beloved stories of all time - Harry Potter. There are times in everyone's life when we need a helping hand, and after divorce is usually one of those times.
1. A sustainable budget is 50% to survive and 50% to Thrive. This requires brave and creative choices, if you are over-spending on basic needs.
2. Try reducing your big-ticket items. (There are other blogs of mine that might help with debt and health insurance costs specifically.)
3. Have more fun. This is usually more of a mind shift than spending more money. And for many, having a reasonable limit to the fun budget means that they are not taking on excessive credit card debt.
About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street and host of the Pace and Prosperity radio show on BlogTalkRadio.com/NataliePace. She is a repeat guest on Fox News, CNBC, ABC-TV and a contributor to HuffingtonPost.com, Forbes.com, Sohu.com and BestEverYou.com. As a philanthropist, she has helped to raise more than two million for Los Angeles public schools and financial literacy. Follow her on http://www.facebook.com/pages/NWPace, and on YouTube.com/NataliePaceDOTCOM. For more information please visit, http://www.nataliepace.com.
Follow Natalie Pace on Twitter: www.twitter.com/NataliePace