In less than 2 months I will be 36, and needless to say, I have had a lot of major life changes in those years. Especially the years since I was in my early 20’s. I went back to grad school at 26. I got married at 30. We bought a house at 31. We had our first child at 32 and our second at 35. We also bought our second house at 35. So LOTS of major life changes. For all of these life changes, we had to prep our finances. These are all things that can cause major disruption to your finances if you aren’t prepared. I want to share how to prep your finances for big life changes so that you aren’t thrown for a HUGE financial loop.
How To Prep Your Finances For Big Life Changes
Do your research: Before any big decision or life change, you want to do your research. If you are going back to school maybe research different colleges, financial aid, student loans and figure out long-term what will be best for you. The same with houses. When we bought our house we looked at maybe 30 houses, we researched areas, finances, best mortgage companies etc.
Make a savings plan: Depending on how far in advance you know about this change you may be able to put away a good chunk of money towards it. Before we bought our first house we spent a long time saving for a down payment. After that its good to have an emergency fun as well as other types of savings accounts.
Know your end goals: Is your end goal to buy a house? Is it to save up a 20% down payment for said house? Is it to go back to school and not have to take our loans? Is it to be able to take a really lavish vacation where you’d be taking time off work etc? Knowing your end goal can really help you plan out and save and also gives you that vision for what you’re going to be wanting in the future. It’s like your vision board.
Put a contingency plan together: When buying a house you might have the downpayment and fees saved up and that’s great but more times than not buying a house can come with unforeseen costs. Most of the time if you are also selling a home at the same time you will have repairs that need to be made. You may also have repairs to make to your new house, things that need to be purchased, setting up things like alarms, lawn services etc. All of these things cost money and can be unwelcome financial burdens if you don’t plan ahead! Having a contingency plan or account in place is so helpful!
The bottom line:
All of the things listed above can help you ensure you stay in a good financial situation. You wouldn’t want to have to max out a credit card which could really hurt your credit or miss payments because you had to use the money for something else that you could have avoided had you had a plan on how to prep your finances for big life changes.
Do you have a big life change on the horizon?
This post was written in 2020 and recirculated for 2021
