February 17, 2020

You Need a Financial Checkup After These Life Events

Has a change occurred in your life recently? Significant life changes can have a big effect on our day-to-day existence. It’s easy to become wrapped up in a new routine, priorities, or responsibilities and forget – or avoid – to look at how finances fit into the picture.

If you have a medical emergency, you know to take action. The signs aren’t always so clear in the world of finance. If one or more of these events has occurred in your life in the past year, this is your sign! Sit down, evaluate your options, and don’t be afraid to ask for help.

You graduated high school or college.

You walked across the stage, got your diploma, and are ready to take on the next chapter of life. Whether you’re moving on to higher education or entering the workforce, now is the time to pause and make sure your finances are set up for success.

Questions to consider:

    • Have I researched and applied for grants and scholarships?
    • Have I created a budget to keep spending and savings on track?
    • Is there a better checking account that could grow my savings faster (or help pay for housing or student loans)?
    • Speaking of student loans, do I have a plan for repaying them?
    • Does my bank offer mobile banking for away-from-home banking options?
    • Would a credit card help build my credit history?

You made a career transition.

Maybe you’re starting your first job, you were promoted, or your company made a change that has left you seeking a new opportunity. Be sure to ask yourself if a money move will make sense in your new situation.

    • Does my employer offer a 401k plan, or should I open my own Individual Retirement Account (IRA)?
    • If available, am I contributing enough to take advantage of my company’s 401k match?
    • Can I bump up my retirement contributions because of a salary increase?
    • Based on my insurance, is it beneficial to start a Health Savings Account (HSA)?
    • As a small business owner, can I offer my employees a retirement savings program?

You got married or divorced.

This is a more obvious situation where finances can take center stage. Paying for a wedding often opens the money conversation for soon-to-be-wed couples, but it doesn’t always continue after the honeymoon. In fact, this MarketWatch article states that misunderstandings and arguments about money early on in a relationship are a strong predictor of divorce.

What questions should you ask yourself if your martial status has changed?

    • Have my spouse and I discussed spending and saving expectations and created a budget to stay on track?
    • Has my spouse been added or removed from my accounts?
    • Have I updated my beneficiaries on all of my accounts?
    • Have I completed a name change with my financial institution?

You bought a home.

You weighed the options of buying vs renting and chose to invest in your own home. Congratulations! Your mortgage lender should have set you up with a comfortable payment plan that does not interfere with other expenses and savings. Here are some things you may want to think about now.

    • Have I adjusted my budget for monthly mortgage payments?
    • Do I have an emergency fund in place for unexpected repairs?
    • Is my insurance up to date?
    • Have I considered life insurance to cover my mortgage should I die?
    • Am I still contributing to savings and retirement accounts?

You welcomed a child.

Adding a new member to your family is a major milestone. Physical needs like the child’s health and nursery space often take center stage. If you haven’t already read about how to prepare your finances for a baby, start there. Then ask yourself these additional questions.

    • Are there lingering medical or adoption expenses I need to be ready for?
    • Have I renovated my budget to make room for my child’s food, clothing, and other needs?
    • Does my emergency fund have enough money to cover 3-6 months of expenses for the entire family?
    • Is my child listed as a beneficiary on my accounts?
    • Is my insurance up to date? If I haven’t already, is now the time to add life insurance?
    • Am I in a position to start a college savings fund?
    • Have I created a will with my wishes should I pass away?

You became an empty nester.

And just like that, the mouth you fed and body you clothed for nearly two decades is ready to enter the real world on their own financial feet. Now what? It can seem strange to suddenly be able to focus more of your funds on yourself. Don’t be shy – it’s important to be strategic and make the most of this time, which is generally the home stretch to retirement.

    • Can I put additional money toward debt or mortgage payments?
    • Do I need to ramp up my retirement contributions or make adjustment to my asset allocations?
    • Am I keeping more funds than necessary liquid?
    • Is my will still current and does it include my full estate?
    • Would guidance from a financial planner help ensure I am set up for success?

You retired.

Congratulations! You made a plan, worked hard, and can now reap the rewards of a retirement lifestyle – whatever that looks like for you. Depending on your age and expected lifespan, you may have many years ahead in this rewarding stage of life. Be sure to stay diligent with your finances and periodically check-in to be sure you are still on track.

    • Have I adjusted my budget to remove my career and add social security or other sources of income?
    • Do I know how much money I can comfortably live on each month?
    • Have I discussed my estate plan with my children and other relevant parties?

Remember, these questions are a starting point to uncover ways to make the most of opportunities throughout common stages of life. A good financial partner will be glad to sit down with you to talk through your unique situation and options. Or, in more complex cases, they’ll refer you to another professional they – and you – can trust.

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