So, you’ve got your financial future all planned out. You’ve made spending changes, you’ve started a savings account, and you’ve got goals. You want to buy a house within a year. You want to have all of your credit cards paid off in six months. You’re ready to take on the world! But, what about changes in plans or unexpected expenses? Do you know what life might throw at you and are you prepared? Below, we’re going to take a look at some of the major financial disruptors you might face in life.
1. Purchasing a Home
Buying a home is a big deal. It takes a lot of time and money. You may be prepared for the financial purchase, but what about the other expenses that go along with it? Once you’ve made your down payment and gotten the keys, there are other things to consider. You’re going to have a monthly payment on your mortgage, and you’ll most likely purchase homeowner’s insurance. There are also taxes to plan for. So, purchasing a home can throw your current plan off. You may have to replan your budget and rethink how you currently save.
2. Getting Married
Marriage can have a heavy price tag, but more than that, it can have a large impact on your financial life. You’ll have to review your current accounts and estate plans. The appropriate people will need to be added to things such as wills or trusts, and you’ll need to make sure your insurance will cover any new beneficiaries. You may also need to retitle some assets to be held individually or jointly with your new spouse.
3. Getting a Divorce
It’s nothing people want to consider, but it could happen. In the wake of a divorce, there are a lot of things to take into consideration. You’ll have to take a second look at any investments you have, retitle accounts, and take a look at your new tax situation. Another concern is losing one of your sources of income. This can very easily cause a financial burden that can cause other issues down the road if not dealt with properly.
4. Starting a Family
Children are expensive. There’s no way around it. You’ll have to take a look at your grocery budget and rework that to include your kids. They’ll also need to be added onto things such as insurance plans and, in all likelihood, they’ll eventually want to pursue college. That means taking a look at your current savings plan and arranging for a college fund to help curb future debt.
5. Losing a Loved One
Losing family is a sad part of life, but it’s still important to be prepared. It’s not only emotionally tiring, but it can be a hard financial hit. Depending on their financial position, there may be debts and other things that need handled. If you were close to the deceased person in question, those may become your own burdens to handle. You may have to take a look at life insurance benefits and sell off their estate if you are their executor.
Another important factor would be if you were left an inheritance. A large sum of money in a short amount of time can be a financial boon, but impulse spending can completely ruin a financial plan. It’s extremely important to decide the best way to handle that money.
6. Getting Sick
No one plans on getting sick, but it does happen. A major illness or injury can be devastating. Such a thing can have a large impact on your finances. You may suddenly lose a large portion of your income or need to divert extra funds into your health insurance. Both of those things can put a wrench in your current financial plan and it’ll need reworking.
7. Job Transitioning
Getting a promotion or a new job that pays more can be exciting, but it’s easy to overdo with having extra money. It’s easy to want to overspend when you’ve got the extra funds, but that can easily derail your financial plan if it turns into a bad habit. It’s important to take a look at your new wealth and allocate it accordingly. You could use it to pay off extra debts or bulk up your savings account.
Adversely, you could face an unexpected job loss. The biggest impact this has is the loss of your major income source. You no longer are making a certain amount of money each month. You may have to rely on your emergency fund to keep yourself afloat while you find more work, but those funds will run dry eventually, so it’s important to rework your current financial plan to stretch those funds.
8. Beginning Retirement
Everyone wants to retire one day, but it takes some serious preparation. It causes a huge shift in your financial situation. You no longer have a main source of income because you are no longer working. Your reserve funds will need to take care of your needs or you’ll need a different stream of income to pay your bills. The biggest way in which retirement can be a disrupter is if it’s unplanned. A change in working conditions or an unexpected illness may cause a need to retire early and then you’ll have to rework your entire financial plan to compensate for lost wages.
These disruptors, if you aren’t prepared, can have you scrambling to make ends meet. One of the main goals of being financially stable is to make more than you spend in order to cushion the blow of the unexpected. It’s important to be aware of these issues that could arise with little to no warning and prepare yourself. To learn more about emergency funds, savings accounts, and more visit rena-fi.com.