- By Emma Andrews
- Posted October 29, 2020
Life Events That Can Have Major Impacts on Your Finances
Life is expensive, as anyone who’s ever had to pay their own bills can tell you. Certain circumstances, however, have a tendency to create additional strain and have a huge impact on your finances, often beyond the initial event itself. Each of these major life events require that some major adjustments be made. If you can prepare for them, you just might be able to make things a little easier on yourself.
Whether financial strain becomes too much, they grow apart, or there is some insurmountable difference, divorce becomes a necessary event for many couples. This can be an incredibly financially difficult time for both the individuals involved and the family. Lawyers don’t come cheap, and the sudden shift in dynamics will inevitably impact how finances are managed as well. By the end of it, there’s a good chance that someone will be paying alimony, child support, or both. If you’re concerned about this particular life event, make sure you get a prenup before you say, “I do.” Already married? Not to worry. A postnuptial agreement is still an option. As uncomfortable as it might be to bring up, it can be a protection to both parties in the event of a divorce.
Sudden injury or illness can result in becoming disabled to the point where your income may be affected. You could end up needing to reduce your hours, find a new job, or stop working altogether. This significantly impacts your finances. There are resources you can take advantage of to help protect you though. You can purchase disability insurance, which may be an especially good idea if you work in a hazardous industry. Social Security Disability may be another viable option for you. You must have a work history in order to qualify for Social Security Disability benefits. You can also work on building up personal savings you can draw upon.
Having children tends to be a much happier occasion than divorce or the onset of disability. It can have a huge impact on your finances though. There’s the obvious cost associated with the birth of the baby. The cost of having children doesn’t end there though. There’s the cost of food, clothing, diapers, and furniture, and that’s just scratching the surface. It’s an ongoing expense that can be tough to prepare for, especially if the pregnancy wasn’t planned. Start saving as soon as you can, and adjust how you spend your money. Plan to add your child to your health insurance to help offset the cost of future medical care. There’s a lot of it during the first couple years of life.
Lots of life events can have a major impact on your finances. Divorce, disability, and having children are all pretty significant examples of this. It can be tempting to fall into the mindset that it’s not something that would happen to you unless you chose it, but that could mean you get caught flatfooted. Take steps to ensure that you are prepared for major life events and you’ll be in a better position to handle them if they come up.
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