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A budget for starting over

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A young woman looking at documents in her living room.

There are moments in life when everything changes. A divorce. A son or daughter who goes out on their own. The death of a spouse. A surprise inheritance.

All of those are important moments for a financial re-evaluation. Suddenly, everything is different and that definitely includes your finances.

If the change was unexpected, it can be hard to think straight at first. But once the dust settles, it is critical that you create a new budget that takes into account your new circumstances.

Creating a new budget will help you establish a baseline before making big decisions, like whether you will move, change your job, or sell your home. Here are a few tips for getting started.

Make a list

Create a realistic assessment of all your monthly expenses. A budget worksheet can help you account for most categories of spending.

Do the math

In addition to expenses paid monthly, capture expenses paid once a year by dividing the total amount by 12. Add this new figure to your monthly expenses. Putting one-twelfth of the total cost into your budget ensures those funds will be available the next time that bill comes around.

Cut back

If there are expenses that can be cut back, go ahead and take advantage of the savings. If your household is smaller now, expenses for food, clothing and haircuts can be reduced. You may also be able to lower your cell phone bill, cable plan, or newspaper and magazine subscriptions. It’s also a good time to re-evaluate insurance policies to see if there are opportunities to save on premiums.

Look at income

An effective budget doesn’t just look at expenses. Be sure to consider the income side of the ledger to understand how much is coming in and when. If you need more take home pay, there may be adjustments you can make to the payroll deductions you previously set up.


Once you’ve totaled your income and your expenses, subtract the smaller number from the larger one to see where you are. If you have more income than expenses, consider saving more each month. If your expenses are greater than your income, you’ll need to consider where you can cut back and what you can do to increase income.

Save more

You may find that your reduced lifestyle allows you to put away more for savings. Remember, for most people, spending is easy and saving is hard. Take the opportunity to add to your retirement savings or emergency savings account while you have the chance. It will be easier to adjust your spending now than having to cut back later.