The Financial Lessons Of Divorce #3. Priorities

I have previously covered the topic of human needs. Needs tend to be hierarchical in nature with lower needs required before higher needs. It tends to follow in the order of – survival – stability – connections – esteem – experiences – giving back. If basic needs are not met one can become stressed or have a hollow feeling of something missing. You have to fill lower needs first, become strong at your core, then move upwards to building your esteem. With strength within, you can then start giving back to others. Aiming too high before strength has developed, can make everything collapse due to a weak base.

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The same concepts can be applied to our financial situation. To provide for our needs,  financial costs are required. The same hierarchy exists – survival – stability – connections – esteem – experiences – giving back.

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Herein can lie the issue after divorce. Before, both my emotional and financial lower needs were fully met. My lifestyle and expenses moved up; up to worthwhile activities for my esteem (hobbies, projects), savouring experiences (travel, entertainment, eating out), and giving back (philanthropy, community projects, and family). When my whole world crumbled, and with it my strong base, as I kept trying to feed higher needs I was used to, my lower needs crumbled further. I had to prioritize my needs in the situation as it stands today. That means thinking of myself, meeting basic needs first, growing a secure savings net next, planning activities (and expenses) that will provide me with connections or improve my self-esteem, then moving upwards to life experiences and helping others.

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These are my financial priorities:

1. Survival

• My Home and utilities.
• Essential living costs. Food, healthcare, basic clothes.
• Minimum loan repayments on debt

2.Connections

• Communication. Phone, internet.
• Safe, reliable car. Petrol, maintenance.
• Transport, travel and accommodation costs in visiting my family.

3. Stability

• Disaster prevention – insurance
• Paying debt off
• Save for emergency fund

4. Discretionary

• Time. Labour saving appliances, cleaner, tradesmen.
• Goals and projects. Education, sport, music, crafts, hobbies, books, computers
• Experiences. Travel, eating-out, entertainment, holidays, festivals, social events.
• Beautiful things. More clothes, furniture, cars, boats, cameras, musical instruments, jewellery, ornaments, paintings, ‘stuff’
• Philanthropy. Helping others, community projects, volunteering, gifting.
• Accumulation of savings, investments.

The Lessons From Divorce

• A basic lifestyle # 1 provides only for essentials, a modest lifestyle adds in a level of security from lists #2,3. A comfortable lifestyles allows some choices from #4.
• I initially classed the first 3 lists ‘essential’ until I realised some people cannot afford them.
• What I previously regarded as comfortable was in fact luxury. After separation, I dramatically cut down our couple luxuries of excessive experiences (it being my husband who tended to need this buzz) and too much ‘stuff’.

My Comfortable Lifestyle

A. My New Basic Budget

1. I include all items on Lists #1
2. Even though not essential, I include all items on lists #2 & 3 as they are essential for me, especially communicating with and visiting my family.

B. My Choices From Discretionary List 4.

1. Maintain essential insurance, eliminate non-essential.
2. Maintain savings schedule for emergencies and unexpected costs.
3. Embark on meaningful projects.
4. Experience moments with special people or those activities that give me meaning. A lot of things I enjoy have little cost such as walking, reading, writing. An occasional meal or drink with family or friends, family gatherings, can still be enjoyed. Watching the sunrise costs me nothing.
5. Maintain savings schedule for higher discretionary costs. Don’t go into debt for them

C. The Items I Have Eliminated Or Reduced

1. Impulse purchases of discretionary items.
2. Non-essential ‘stuff’ – trashy magazines, newspapers, books, fashion accessories, household items, gadgets, music, hobbies, hair costs – except for items that fall under #B3 above (meaningful projects).
3. Reevaluated travel plans, house upkeep and entertainment in terms of budget.
4. Cut out bought lunches & coffees.
5. Halved my grocery bill, buying less meat, more vegetables and pulses, hardly any processed foods. I am shopping at the farmer’s market. I diligently use up food at the end of the week, plan menus ahead, and shop from a list.

D. As for ‘giving back’?

See point B3 above.

This is so empowering to be taking control of my life again, one step at a time.

🙂 🙂 🙂

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This has been the ninth in a series of posts on My Responsibilities

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