Life is full of significant changes that can impact your financial situation, and it's crucial to review your finances during these times to ensure you're on track to meet your goals and handle any new responsibilities. Here are six major life changes that warrant a thorough financial review:
1. Starting a New Job or Career: When you begin a new job or switch careers, your income, benefits, and tax situation may change. It's essential to update your budget to reflect any salary adjustments and new or altered benefits, such as health insurance or retirement contributions. Additionally, consider adjusting your savings and investment strategies to align with your new financial landscape.
2. Marriage or Entering a Partnership: Combining finances with a partner brings both opportunities and challenges. You'll need to discuss and align your financial goals, create a joint budget, and potentially update or create legal documents such as wills or powers of attorney. It’s also important to review how your new marital status affects your tax filings and benefits.
3. Buying a Home: Purchasing a home is a major financial commitment that significantly impacts your budget. You should review your financial situation to accommodate mortgage payments, property taxes, and maintenance costs. This is also an opportune time to evaluate your long-term savings goals and adjust your investment strategy to ensure you’re prepared for future expenses.
4. Having a Child: The arrival of a child introduces new financial responsibilities, such as medical expenses, childcare, and education savings. Reviewing your budget to account for these new costs and adjusting your savings plans for future expenses like college can help ensure you’re prepared for the financial demands of parenthood.
5. Retirement: As you approach retirement, it’s crucial to review your finances to ensure you have enough savings to support your desired lifestyle. Evaluate your retirement accounts, estimate your future expenses, and consider how to withdraw funds in a tax-efficient manner. This review will help you make necessary adjustments to your savings strategy to secure a comfortable retirement.
6. Experiencing a Major Health Issue or Disability: A significant health issue or disability can have profound financial implications, from increased medical expenses to potential changes in your ability to work. Review your insurance coverage, including health, disability, and long-term care insurance, to ensure you’re adequately protected. Additionally, update your budget and financial plans to accommodate any changes in income or expenses.
By regularly reviewing your finances during these major life changes, you can better manage your resources, mitigate potential risks, and ensure that you’re prepared for whatever comes next.
