Financial Planning for Major Life Events
posted on Thursday, August 3, 2023 in Financial Tips
Throughout our lives, we will encounter various major life events, like marriage, parenthood, etc. And even though these situations can bring significant changes in a person’s life, it’s important to remember the effect it has on your finances.
Making sound decisions is necessary if you want to avoid sinking into debt in the long run. With that said, here are some major life events that will require proper financial planning and what you can do:
Buying a House
Many people recommend that being a homeowner is better than renting an apartment or a house because it’s a major financial investment. Over time, it allows you to build your equity. As you pay off your mortgage, your ownership stake in the property increases. Moreover, you can receive additional tax benefits such as reduced mortgage interest, allowing you to have significant savings.
However, it’s understandable that it’s a difficult goal requiring much financial preparation. If you plan to be a homeowner, building your credit score to 740 or higher is important. That way, you’ll have a better chance of getting approved for a mortgage. You should also develop an emergency fund to cover major expenses such as repairs.
Marriage and Parenthood
The talk of settling down will eventually come up between you and your significant other. That’s why it’s essential to have a financial discussion even before you walk down the aisle. Discuss your goals and priorities as a couple. Understand that you will have to merge finances. As such, you should establish a budget covering you and your partner’s needs.
In addition, you may also plan to have children of your own in the future. Because of that, you should have a budget for expenses you’ll need for your child. These include healthcare and other daily necessities. Consider having a 529 savings plan. It’s a great way to help save for your child’s education.
Changing Jobs
Another thing that you need to be mindful of with your finances is whenever you change career paths or occupations. Landing a better job will improve your earnings, but it’s essential to plan for the future to be prepared.
Understand your new job’s benefits and use them to your advantage. Learning more about retirement plan options, such as 401(k) and IRA, would be best. Lastly, it’s a good idea to have a temporary transitional budget in case of a delay between your last paycheck and your next one.
Preparing for the future can help you achieve your financial goals without worrying. If you want to learn more, talk to one of our representatives today at Community 1st Credit Union.