Dealing with life events, financial stress and planning
Dealing with new and unexpected financial stress can be intimidating for individuals of all ages and income levels. The costs that accompany major life events are also difficult to predict from a financial and emotional perspective. Here are some proactive steps to financially plan for life’s high-cost events:
Going to College
College is a wonderful and exciting time, but it is also one of the most financially stressful life events. Taking on your own college loans, whether you’re right out of high school or returning to college after 20 years, is daunting. Consider these resources when navigating school funding:
- Financial aid office. Before classes kick-off, schedule an appointment with the financial aid office. This is a great way to determine the amount you’ll need to borrow, and pinpoint any scholarships you may qualify for. Speaking with a financial advisor adds perspective to the ins and outs of your unique situation.
- Career services. If you’re not working and need extra cash in your pocket, consider picking up a job on campus. You may also qualify for a work study grant. Speak with your campus career services team to find opportunities available to students.
- Your employer. If you’re already working full time, let your employer know you’re going back to school. Many employers establish programs to assist with excess costs. At the very least, your manager may be able to help balance your workload.
- Federal education credits. If eligible, you could potentially receive up to $2,500 when filing taxes. These funds are provided by the American Opportunity and Lifetime Learning credits.
Still worried about the final price of your loans? Calculate the amount you’ll owe before you borrow so that there’s no surprises when it’s graduation time.
A great rule of thumb: pay down loan interest as much as you can while you’re still enrolled in school.
Here’s a surprise: the average wedding in the United States is $35,329 according to TheKnot.com. Whether you spend less or more is a matter of both your financial situation and preferences.
It’s highly advised that couples considering marriage have a frank conversation about shared financial priorities. This will also provide the perfect opportunity to admit any debt you have, as well as salaries and personal finance goals.
This is not always an easy conversation, but it’s certainly a healthy one to have.
Possible cost-cutting wedding options include:
- Elopement: Not only is this option the gentlest on your wallet, it’s also relatively stress-free. An elopement ceremony can be just as emotional and special as any other kind of wedding if you make it your own!
- Big Traditional Wedding: If this is your ideal scenario, the first step is to speak with your partner and determine how much you will each contribute to the wedding. If this is a viable option, speak with both sets of parents to learn what they can also contribute. Once a budget is set, the two main budget-killers are guest list size and location. Narrowing down the guest list is the quickest way to cut costs.
- Small Wedding: This would typically include the bride and groom, along with 20-50 of the people you two care most about. The average wedding has 120 guests. Limiting your guest count to 50 or less is a great move if your budget is smaller than average. Even with an average budget, a small guest count offers room to splurge on a ritzy location and luxurious food.
If you’re still overwhelmed with planning for a wedding’s financial burdens (including the infamous wedding registry), consider small ways to keep costs down, such as purchasing secondhand “mismatched” dresses for your bridal party, going with in-season and low-cost flowers, or hiring a DJ instead of a band.
Welcoming a Child
There’s nothing quite as exciting as welcoming a new family member! You likely have a million things on your mind including all of the possible expenses that come with a new child, and how you will financially plan for each stage of your child’s life.
If possible, start a savings account as soon as you learn that you’re expecting. It never hurts to have an emergency fund should hospital bills or other last-minute expenses arise. Building an emergency fund that covers three-to-six months of expenses is essential—no matter what your situation is.
Finally, consider shopping for secondhand maternity clothes. You’ll only be wearing them for a few months, so it’s best to save where you can. Consider online thrift stores like thredUP.com for high-quality pieces at a steal. After giving birth to your little one(s), you can even recoup a bit of your cost by selling clothing items back to thredUP.com!
Determining the Right Move for You
No matter the life event, it’s always a good idea to talk with a financial adviser. Even a Tax Pro can help you deal with financial stress by framing your current situation and reallocating your existing funds for future tax responsibilities. Keep in mind, long-term changes will likely effect your tax needs.
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