11/05/2020: Navigating Life Changes

Navigate your life with a reliable financial roadmap

As you age, your life will take many twists and turns, with each change in direction marking a significant life event that ultimately determines where your path leads.

Positive examples are applying to and graduating from college, getting your first job, getting married and starting a family. Unfortunately, you might hit a few roadblocks along the way, including job loss, divorce, medical emergencies, or caring for an elderly parent.

No matter what life event you experience, preparation is the key. Sometimes these events are unexpected, but you can still plan ahead by saving money. Try not to touch the money you put in your emergency savings account so that you’ll have a secure safety net no matter what life throws at you. 

Planning your future

Making smart decisions requires research and planning. Deciding to attend college requires extensive research. Wedding planning takes time and money and finding out you’re having twins demands a possible overhaul of your financial outlook. Before each big decision, think about how much money you need for the most expensive scenario. Talk to us about setting up a savings account that will allow you to meet a monthly savings goal and accrue interest over time. You should also consider setting up a recurring transfer so money is deposited into your savings account automatically.

Costs to consider as you plan

  • The average wedding cost is almost $34,000, including the engagement ring, ceremony, and reception.
  • Baby bills: The birth of a baby can vary in cost, but the general price tag can sometimes be above $25,000. Then there’s the additional costs of a crib, car seat, diapers and clothes that you’ll need to care for the baby.
  • Home buying: When you see the price tag on your dream home, don’t get carried away about what you see on paper. Depending on your bank’s mortgage rate, your monthly costs could be hundreds of dollars higher in interest alone.

Unexpected events

When you hit an unexpected speed bump (or a roadblock) in your life, you may be forced to deviate from your initial plan. For example, the COVID-19 pandemic forced many people to rely on unemployment benefits to pay just their essentials until they can find another job.

It may seem like COVID-19 is the only medical issue in the world right now, but there are other diseases and injuries that could land you in the hospital, too. The Centers for Disease Control and Prevention reported that 139 million people went to the emergency room in 2017. ER visits and hospital stays can cost thousands of dollars depending on the type of insurance you have. If you have a High Deductible Health Plan (HDHP), you can put money from your paychecks into a Health Savings Account (HSA). This money comes out of your paycheck before taxes, and you can use it to pay for deductibles, co-payments, and other medical expenses.

Divorce is an expensive decision, too. Lawyers can charge hundreds of dollars per hour, and after all the dust settles, you might be on the hook for more than $12,000, which is the average cost of divorce, according to a recent survey.

Simple strategies to save money

  • Cut subscriptions, memberships and streaming services you don’t use.
  • Shop for deals or generic brands.
  • Reduce frivolous purchases.
  • Pack a lunch instead of dining out.
  • Shop with cash-back checking so you can earn money on the purchases you do make.
  • Move in with family temporarily if you’re between leases.
  • Talk to your employer about adjusting your W-4. The IRS released a new form for 2020 that no longer relies on allowance claims to determine how much money is withheld from your paychecks. Resubmitting your W-4 could balance your income so that you aren’t withholding too much now and waiting for your tax refund later.

Nobody knows exactly where their life will take them, but having a strong financial plan can lead you in the right direction and prepare you for any obstacles along the way.

FINANCIAL EDUCATION

YOUR MONEY, YOUR LIFE FINANCIAL EDUCATION

We know you face important financial decisions every day and we are here to help. This program will equip you with the critical knowledge and skills you need to make the financial decisions that are best for you.