Major life events that require a new financial plan
Not all changes are bad—but they all require a second look at your current plans. Things like graduations, marriages, job changes, having a baby, and retirement all cause large shifts in financial priorities. When these events happen, it's a good time to sit down and re-evaluate your goals and plans.
Here are our best tips on dealing with the financial implications of major life events:
Schools out! You’ve finally graduated.
All the years of studying have paid off, and you have a diploma in hand and a bright future ahead of you. As a new graduate, you likely haven’t had a ton of income in your past. At most, you worked a part-time job and put that money towards tuition or living expenses. Now that you’re entering the real world and are going to be a full-time worker, do you know what do you do with all that extra cash?
Managing money can be difficult for people of any age, but it’s especially hard for new workers who haven’t done it before. This is the time where people make mistakes that hurt them for years to come—irresponsible credit card usage, overspending, and forgetting to budget. The best thing you can do is learn the basics of finances. This one thing will keep you on the right path.
Once you understand the basics, start looking ahead and figuring out where you want to be. Your life path is entirely up to you. Map out what you hope for in a career, a lifestyle, and a possible family, and then start saving towards these goals.
You’ll also want to start paying down your student loans as soon as you have a steady income stream. Interest-only increases as time goes on. Get ahead of the game by starting now.
You’re tying the knot.
Nothing calls for a complete financial overhaul like bringing another person onto the scene. In the excitement of being a newlywed and living the honeymoon era, don’t forget to have the all-important financial discussion. Merging finances with a spouse can get messy—especially if one of you is bringing debt or financial commitments like kids to the table.
Talking about money might be uncomfortable, but it’s essential to both your financial stability and the future of your relationships. Disagreements over money matters create tension that can lead to bigger problems. Setting up clear objectives and priorities will keep things running smoothly for years to come.
It’s time to settle down and buy a home.
A home is likely the largest purchase you’ll ever make, which means it will require a lot of preparation. Before buying, you have to think about things like saving for a down payment and improving credit to get more favorable loan terms. After buying, you have to worry about making mortgage payments and funding home repairs, not to mention the countless other ways a home affects your finances. Most of these are positive, like building equity, increasing assets, and receiving income tax breaks, but there is also the downside of paying interest on the loan and additional insurance costs.
First-time buyers should be well aware of how these factors will impact their current situation. They should learn about their loan options and how to get the best deal possible. Doing research and understanding how to make the most out of the home buying process will be a great benefit.
There’s a little one on the way.
The birth of a child is exciting and life-changing, especially if it’s your first. Having a baby means your life is about to be turned upside down in many ways. While rewarding, you can expect lots of new expenses. You’ll have to cloth, feed, and provide for this child. In the future, there will be education expenses and activities they’ll want to participate in.
Sit down and map out how you’ll afford these things. It may be a good idea to start a savings fund for your child, for college and future costs.
Moving can at once be exciting, terrifying, and stressful. It is also expensive. From moving trucks to a new house and furniture once you arrive, the costs quickly add up.
Once you're settled in, the adjustment to a new place might still take some time. If you’re not used to the city, you might not yet be aware of things you took for granted at your old town, where to shop, where the best discounts are, and the best areas for housing. Living expenses in the new place might be higher or lower than they were before, which is something you’ll have to adjust for.
With so many changes, you’ll need to re-evaluate your budget. There may be expenses that no longer apply or new ones that arise. For instance, if you’re moving from a warmer climate to a cooler one, you’ll have to prepare for additional electricity expenses that come with heating the house during the winter.
You found a great new job.
After all these years, you’ve landed your dream job. Of course, it comes with an increase in pay. An income boost is a great thing, but you need to adjust accordingly. Too many people who receive additional income end up spending it all without a second thought—leaving them right back where they started.
It’s ok to splurge sometimes, but don’t go and spend all the new money without re-evaluating your plans. Make sure you are being responsible and using the extra funds to your advantage. Maybe you pay more into your savings or retirement account. Maybe you’re finally ready to make a down payment on a house or pay off debt. Figure out your priorities and use the extra money to support them.
You’re ditching the 9-5 and retiring.
This is the milestone everybody looks forward to. No more obligations, no more having to clock in at the office every morning, no more long morning commute. You’re finally free, but you still have to be financially responsible.
Retirement comes with new financial concerns, like increased insurance, properly managing investments, and learning to access social security funds. As you enter this new era, be sure to re-draft your budget to fit your new situation. What worked before might be totally different now, and that should be reflected in your plan.
Nuvision is with you every step of the way.
From the time you open your first checking account as
a young adult to the time you are getting ready to retire,
Nuvision has you covered. Our services help thousands of people across all stages of life. We meet you where you’re at and support you in whatever you need.
The information contained within this article is for informational purposes and should not be considered financial advice. Everyone’s financial situations are unique and you should consult a financial advisor for assistance with your particular situation and goals.