September is National Preparedness month and an important component is being financially prepared for all of the life events that can come your way, expected or unexpected. It starts with understanding how different life events might impact your financial situation.
What are some of the events we all need to prepare for?
These life events are varied, examples include: buying your first home, having a baby, loss of a job, medical expense, dealing with a natural disaster, or even taking care of your parents.
What steps should we take to prepare for buying a home?
The basic steps should be: build excellent credit, save for a down payment, have a budget so you know how much house you can afford, understand all of the costs of homeownership and finally, get a team of professionals including a loan officer and a realtor.
What are important steps in preparing to have children?
It is always important to start with the impact on the household income - will one parent stay home or work part time? If this is the case, start well in advance of the baby coming to make important financial changes to your budget and practice living that way for at least six months. Also, it is important to adjust other budget expenses due to having children.
What are some of those expenses that new parents tend to miss?
Probably the most common is to not increasing their food, clothing, medical and cost of insurance expenses. This can be a shocking revelation to new parent’s regarding how much the impact children will have on their monthly budget. And this is before any savings for college is considered. Plus, there are other costs including babysitting and added expenses when traveling.
What’s is the best way to prepare for life’s unexpected events?
There are a couple of important ways to prepare for some of life’s curveballs. First is building an emergency fund. Second, don’t overextend on credit and live well within your means. This helps because your emergency fund won’t have to be as large to help you make it through the tough times. Finally, have proper insurance coverage including home, auto, renters, life and disability insurance as appropriate.
How can we prepare for dealing with our parents if needed?
The most important component is having an open dialogue with them and making sure they are financially prepared for whatever comes. It may be difficult but children should understand their parent’s financial situation and identify any gaps. Sometimes this awareness can lead to changes that can avoid problems in the future.