Many of us were probably used to hearing about the different aspects of our lives – social, financial, career, family, etc. While we usually think of these separately, one cannot deny that major events in any of these aspects can affect the others, especially the financial one.
When we do encounter such happenings, it is almost always a must to take have a second look at your financial plans. As Benjamin Franklin once said, “by failing to prepare, you are preparing to fail”.
Are you wondering when you should be adjusting your budget and rethinking financial decisions? If so, take note of these life-changing moments that will impact your investments.
It is not always the easiest, but it is better to make the necessary adjustments and preparations even before problems start to arise, especially when you are anticipating major changes in the future.
Expecting a new member in the family
Why you need to prepare for it: There’s a reason why everyone keeps on emphasizing the importance of family-planning, and that is the undeniable fact that having and raising a child is expensive. You are no longer just responsible for yourself – a life of another now also depends on you. While you can make it through the rest of the month with little food, the same cannot be said of a hungry, wailing infant. So if you are expecting, you might want to modify your future financial plans accordingly, if you have not yet.
Step/s to take:
- Allot budget for education early on.
Diapers, milk, and other necessities are one thing, but education is another. The latter is undeniably much more costly. And perhaps one of the most important investments you can make for your child is a good education. The harsh reality is that one’s education, while not the be-all and end-all of one’s future, plays a vital role in your child’s abilities and opportunities.
This is not just making sure that your child gets to land a high-paying job in the future; one’s perspective and philosophies in life, critical thinking, and sets of principles are also partly shaped by the education institutions.
Do not let your child’s progress to success be slowed down by student loan debts, and make sure to set up a education/college fund as soon as you are expecting.
- Prepare for the unexpected.
In case something bad happens to you and/or your partner, you do not want your child ending up under the care of the state. You would, of course, want him/her to be taken care of by someone whom you truly know and trust. Foreseeing such possibilities, you might want to name a guardian for you child. This might also be a good time to invest on insurance, especially a life insurance for your child.
Why you need to prepare for it: You have probably heard countless of times that marriage is no piece of cake. For one, it requires the both of you to work together as a team. This is especially needed when it comes to handling finances. It is a no-brainer that a marriage with a couple who do not go through some sort of financial planning together is more likely to fail or ultimately, lead to separation or divorce. Do not let money problems get the better of you and your partner and ruin a healthy and happy marriage altogether; start planning your finances together as early as possible.
Step/s to take:
- Communicate with each other.
Before anything else, it is important to build a good foundation of trust between the both of you in marriage, and one key ingredient to this is communication. This does not mean that you will no longer go through financial struggles; however, it will significantly make it easier for the both of you to overcome them if you can confide in and help each other along the way. Try to discuss amongst yourselves your financial issues like debt as soon as they come. Do not ignore them and wait for them to be massive problems that will be more difficult to resolve in the future. Make it a habit to allot a time for every week to talk and make financial plans together. What are your financial goals? Your prospective investments? How are you planning to achieve them? Write these things down. More importantly, share responsibilities. When doing so, consider each other’s strengths and weaknesses.
- Start an emergency fund for the both of you.
You are no longer just working for yourself now. The financial problems of one person in a marriage are also problems of the other. For this reason, it might be a good idea to start saving up, especially in case of emergencies and other unforeseeable events. Financial experts advise that emergency funds should be able to cover your expenses for at least 3 to 6 months in times of need such as unemployment, health problems, and home repairs. If you already have your own before marriage, consider that the amount might not be enough to cover two people. This time, that is exactly what you will need.
Finding a new job
Why you need to prepare for it: You have to understand that whenever there is a significant change in your source of income, your budget and expenses must be adjusted accordingly as well. That is, of course, if you want to keep a certain lifestyle and a stable financial standing, and avoid tapping into your savings. A new job means a new contract, and a new contract means different terms, salary/income, and benefits. When stepping in an unfamiliar ground such as this one, it might be wise to rethink your financial strategies.
Step/s to take:
- Analyze the differences.
If you have already been keeping a stable pacing with your past job, it would make your readjustments easier to start by comparing your current job to it. Put into consideration the different factors such as wage, benefits, bonuses, transportation & food costs, indulgences, recreation, & entertainment, short- and long-term goals, and others. Once you have all the necessary data, create a new budget. Will you be earning more in this current job? If yes, maybe you can be a little loose on the budgeting, or better, you can add more to the portion that is solely for your savings and other funds. Another idea is investing on your long-term investments such as purchasing a property. If your answer is no, you might need to adjust your expenses; by how much you need to adjust would depend on the difference of your current salary and the past one in addition to the changes in your expenses.
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