Steps to Get Control over Finances

1. Review your family’s overall financial picture

• Summarize your financial life as it is at this moment.
• Make a record of everything you own (assets) and everything that you owe (liabilities). 
• Expect your income to drop after you separate. 

2. Live by a budget

A budget, or spending plan, can help you balance expenses with income, and help you make good choices with your money.

A budget is a tool that puts you in control of your money to meet family needs and wants. It will show how much money you have, where it needs to go to meet your needs, and when you will be able to reach your goals. A budget puts you in control.

With a budget, family members :

• Can increase their chance of making payments on time
• Decide what they can and cannot afford
• Increase savings for large or unexpected expenses
• Reduce impulse spending
• Reduce debt
   

3. If you own your home, decide if you can afford to keep it

Keeping your home may be your preference, but it may not make financial sense. The equity in the house won't pay the bills. You may end up asset rich but income poor.

If it makes sense for one of you to keep the house, that parent may want to pre-qualify for a mortgage before taking the other parent’s name off the title to the house.

4. Reduce spending

After separation you may need to evaluate your expenses and make decisions about what you can and can’t afford. Depending on your lifestyle, you may need to ask yourself:

• Should I work or stay home?
• How often can we eat out?
• What extra school expenses are manageable?
• How much entertainment can we afford?

To reduce spending:

• Know what you spend your money on, and where you spend it.
• Stop spending that increases debt. Pay cash for necessary items like food and shelter, but don’t buy any lifestyle products on credit. 
• If you don’t own it now, don’t buy it.

5. Decrease your debt

• Do not use credit to postpone a crisis.
• Do not use credit lines for anything but essential expenses, and only for a short period of time.
• Implement a plan to cancel joint accounts and pay out existing debt.
• Be careful to compare the rates for bank debt with bank credit card debt, store credit card debt and money mart loans. The rates of interest will be very different and much higher than the bank debt.