7 Life Events to Reevaluate Your Finances

Sep 1, 2023 11:57:00 AM

It’s never a bad idea to sit down and think about your finances. This is especially true when there’s a significant life event on the horizon. Here are seven key moments to take a pause and reevaluate your budget, saving strategy, retirement accounts and so on.

1) Starting College

Entering university is an excellent opportunity for students to take on more financial independence and responsibility. Along with opening a checking account for expenses and a savings account for longer-term planning, college students may be interested in getting their first credit card. As a family, sit down and discuss healthy credit card practices, including paying bills on time and not racking up a balance, to avoid getting into debt. A credit card specifically designed for students may be a good option to help new card users establish a credit history and earn perks.

2) First Job

Got your first job? Congratulations! This is an exciting life event, and a good time to reevaluate your finances. If you don’t already have a household budget, start one now to make sure you’re spending your paycheck wisely. A budgeting app such as You Need A Budget (YNAB) or Mint can help. In addition, set aside a few hours to review your workplace retirement benefits: whether it’s a 401(k), payroll-deduction IRA, or another kind of tax-deferred savings plan. Knowing the ins and outs of your workplace retirement plan is an important step to staying financially fit in the years to come.

3) Marriage

Before saying “I do,” sit down with your future spouse and talk about everything money. Along with the day-to-day issues such as whether you’ll keep individual accounts or pay for everything from a joint account, this is also an opportune moment to discuss the big picture topics: your financial goals, your debts, and what your values are with regards to saving and spending. While the money conversation can at times feel difficult or awkward, it’s important to start learning how to communicate about finances with your partner sooner rather than later.

4) Welcoming a Baby

If there’s a new baby on the way, it’s definitely time to reevaluate your finances. Take another look at your household budget to see where spending can be reduced to free up funds for diapers, food and clothing; keeping in mind that secondhand shopping can greatly reduce your expenditures. Many new parents also use the arrival of a baby to consider purchasing or updating their life insurance policy, which can add a layer of financial protection in case of a death in the family. Starting a tax-advantaged educational savings account is another example of a smart long-term financial move at this stage.

5) Changing Jobs

Moving into a new role at work, or changing to a new company all together, signals an opportunity for a reevaluation of finances. If your salary is seeing a significant growth, don’t run out and spend it immediately! Instead, take a look at your credit score and debts to determine if you can pay off any credit card balances or loans earlier than planned. On the other hand, you might also put that extra cash into an emergency savings fund—most experts recommend having enough saved to be able to cover three to six months of expenses.

6) Retirement

It’s never to early to start planning ahead for retirement! This important life event signals a significant shift in your financial plans and priorities. There are a number of big decisions to make, including when you’ll start receiving Social Security, when to sign on for Medicare, how your retirement accounts’ investment strategies will need to shift, and so on. If you’re not sure where to start, consider scheduling a session with a financial expert, doing more research from trusted sources online, or checking out the retirement education content on the HUECU blog.

7) Death in the Family

Coping with a death is no easy feat, but knowing the right financial steps to take can reduce some stress. Once a death certificate is obtained, you’ll be able to start the process of probate with the help of an estate attorney or another executor. Financial institutions should be informed of the death, at which point those financial assets can be passed on to beneficiaries as per a will. Once the big paperwork is through, take a minute to reevaluate your own financial situation in light of the death. If you’ve inherited funds, consider paying down debts or making an investment for the future.

Tags: Savings, Money Tips, Budgeting, Retirement, Estate Planning