"This is the form you need to fill out." My divorce lawyer smiled benevolently and handed me a 20-page document. First page: name, address and phone number. Ha, I thought, smugly. I can do this.

The next 19 pages of the financial statement for my separation came straight from accounting hell. I needed to provide annual costs for everything from school supplies to property taxes. Forget taking a snapshot of my life – this was more like a four-volume CD-ROM.

Panic rising, I smiled weakly. Clearly, my lawyer hadn't seen my medieval filing system of storage boxes, plastic bags and recycled folders liberally decorated with cryptic numbers, notes and flowery doodles.

Breathe deeply, I told myself. Gathering the minutiae of a lifetime won't be easy, but neither is giving birth, or listening to four hours of The Wiggles with kids in a van. And I've done both. Twice. (The Wiggles more than twice.)

Weeks later, as a newly single mother of two struggling to cut costs, pay bills and sleep without images of debt collectors dancing in my head, I wasn't quite so complacent about reorganizing my financial affairs.

I'd always managed the bills, mortgage and shopping, but did so without giving money much thought. Mundane payments for registered retirement savings plans, registered education savings plans, property tax, mortgage and life insurance all happened auto-magically through the twin technological marvels of direct debit and online payments. Sure, we sometimes struggled – but not enough to prepare me for life after the collapse of an 18-year marriage.

With careful planning, sole parenting doesn't have to put you in the poorhouse. "It's challenging, especially when you're just getting through the day-today," says Eva Sachs, founder of Women in Divorce Financial in Toronto. "But the more clearly you think, the better off you will be." Here's where to start.

1. Gather information
"How much do I spend on kids' haircuts annually?" I chewed my pencil and frowned. There was no space for "No bloody idea" on the form my lawyer had given me to work out income, assets, debts and spending. But as I plodded along – alternately bored silly and scared speechless – my fiscal picture slowly came into focus. "Assume that you need to stand on your own two feet," says Jennifer Maier, a financial planner in Port Coquitlam, B.C. "Look at your fixed and discretionary expenses, and ask yourself, How am I going to move in the right direction?"

2. Make a plan
When Carmen Barkasy's husband of 15 years walked out in the spring of 2007, he left her with more than just a broken heart. The Vancouver couple, who rented and had car payments, were $40,000 in debt.
Rather than panic, the feisty mother of three made a plan. Unable to survive on her administrator's salary, much less pay her half of the debt, Carmen, who is now 38, quit her job and filed for bankruptcy, with the hope of retraining as a sonographer. She lost her car in the process, but bought a bike trailer to take her young sons to school. To stretch her family benefits and support payments, she cancelled her Internet and cable connections, sold her computer, and now plans to rent a home with a divorced cousin who also has two children.

If you're in a similar position, "have faith in yourself," says Maier. "You can get through it and there's more to life than money." It's a mantra I've repeated to myself throughout this long first year of my new existence as a solo parent. Sometimes I ignore the words and feel sorry for myself. But mostly they reassure me.

3. Determine your cash flow
Add up your monthly gross income from your salary, spousal or child support, investments, and government payments or benefits. Then tally all your expenses – housing, car loans, clothing, sports, bank fees, snow removal, gifts and yes, even kids' haircuts. (TIP: Spousal support is taxable, so set aside money for that as well.) Many costs will be annual, such as property tax and association dues, so average them out as a monthly total. For better or worse, the difference between income and outlay should reveal whether

4. Talk to your bank
That's what Karen Malatesta did in 2003, when her 16-year marriage ended. Wishing to keep her Toronto home, the 45-year-old banker and mother of two cut a deal with her husband. She'd sell in two years; he'd hold a lien for half the equity until then. Key to her success was speaking to her banker early, as soon as she knew her monetary position. Bonus: Most banks and credit unions offer free financial counselling.

Not everyone is as fortunate as Karen. Still, your bank may be able to help. "Find out if you can reduce your mortgage payments or defer a payment until you get on your feet," says Karen. "But do it soon. They can't do anything if you're six months in arrears. By then, it goes to a collection agency and it's out of the hands of the branch."

5. Make a budget
By the time she'd been a single parent for six months, Alison Weatherston, 44, had her ducks in a neat financial row. But it wasn't easy. Convinced she couldn't keep her small home near Ottawa, the mother of two avoided her bank. But when she got up the courage to go, she was pleasantly surprised. Taking her midrange income into account, along with bills and debts, her banker determined she could increase her mortgage, buy out her ex, and pay his half of the house equity.

It was a smart move – but it left her on a fixed budget with little wiggle room. "I sat down with a pad of paper and put income on one side and outgoing costs on the other," says Alison. "It wasn't very high-tech. I played with the numbers to a certain extent – once this bill is paid off, it frees up that money. Where else can I put it?" It's a realistic approach many sole parents eschew, says Maier. "At some point, you need to cut back. You have to deny yourself something now to have something in the future."


Page 2 of 4With her mortgage payments composing about 33 per cent of her gross income (most experts say that mortgage costs should be under 30 per cent of gross income, although Maier says 50 per cent or more is spent in some markets), Alison now shops with a grocery list and only strays from it when there are sales on essentials. She bought a small freezer to store homemade soups and chilies, goes to the library rather than the bookstore, saves $50 a month by forgoing cable TV, and limits the number of birthday parties her girls attend.

Alison also signed up for monthly payments for such expenses as insurance, to eliminate large year-end bills. "It's easier to come up with onetwelfth every month, rather than $800 at once," Alison says, adding that she is using her line of credit, which carries seven per cent interest, to pay off her 28 per cent interest credit card. much materially. She has some savings, though not the 10 per cent of her gross income recommended by financial experts, but, most important, she has peace of mind. "It's scary to face your finances alone," she observes. "But when you get them nailed down, it's really, really satisfying."

6. Establish your financial identity
As organized as she was about other things, the one post-separation issue Karen didn't anticipate was fighting to pay bills. The utilities had originally been in her husband's name, so she faced a bureaucratic nightmare when getting the hydro, phone and water accounts switched to hers. "The guy from the phone company actually made me cry," she recalls. "In the end, my husband had to call and agree to the changes. It was horribly humbling." Fortunately, Karen had one thing working in her favour – her own financial identity.

"I've seen women come out of 20-year marriages with no credit rating because they've shared their husband's credit cards," says Karen. Sachs urges women to also have a personal bank account. "From Revenue Canada's perspective," she says, "you're not separated if you have the same information as your spouse," such as home address and bank accounts, which will affect your family benefits and income tax.

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Establish your own credit history by always paying bills on time, never overdrawing on a chequing account, and applying for a store, gas or credit card if you don't already have one. If you have no credit profile, you may be eligible for a secured card, for which the lending institution holds $500 to $1,000 in trust for a year. "If you can get a card, use it even to a small extent," Karen advises. "It shows that you're responsible." To get a free credit report call (or visit) Equifax Canada (1-800-465-7166) or TransUnion Canada (1-866-525-0262).

7. Get a separation agreement
Critical in that process is discovering your child and spousal support entitlements. "There are support guidelines, and you have to pay or be paid," says Anne L. Moxley, an Ottawa-based divorce lawyer. "But you can't enforce them unless there is a separation agreement or court order." In other words, whatever your entitlement (child support is based on access, spousal support on income and number of years married), establish it as soon as possible. Regardless of who gets the lawn mower, you should write a partial separation agreement for support, to ensure a steady flow of income. To learn more, visit www.justice.gc.ca and search for "federal child support guidelines."

What happens to my… ?
RRSPs
According to Anne L. Moxley, an Ottawa-based divorce lawyer, splitting RRSPs in the separation shuffle can be done two ways. "You can do rollovers so they're equalized on both sides and you both walk away with the same amount," she says. For example, if one spouse has $20,000 in RRSPs and the other spouse has $10,000, the spouse with more will give the other $5,000 so they are both even. "Or you can keep yours as an asset, subtract the tax liability, and mix it with other things to create a fair split."

RESPs
If you contributed to your child's education savings plan before separation, RESPs are not calculated in the assets being divided. If you contribute after separation, they are credited to your side as post-secondary support.

House
The decision to keep your house depends on custody arrangements and finances. "There's no hard rule," says Moxley. "It's just what works." The law says it is an asset with special status and therefore owned fifty-fifty. If you want the house, you have to buy out your ex or use it in an equalization calculation, which is done through your lawyer.

Pension
Usually, an actuary calculates the value, which is considered an asset. Pensions can be legal nightmares to contend with because they involve an estimated future value. Sometimes they are split, sometimes they are equalized.

Will
"The law says that once you divorce, any provisions in your will for your ex-spouse will be revoked," says Moxley. Still, reviewing your will is important

Read more:
• A single mom's best-kept secret
• The meaning of "mom"
• Finding a healthy balance: The single-parent formula


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This story was originally titled "Financial Strategies for the Single Mother" in the May 2009 issue. Subscribe to Canadian Living today and never miss an issue!