Guide to Managing Money During Major Life Events

Finances can often get caught up in the midst of marriage, divorce or death, making it that much more difficult to manage an already stressful situation. Let us guide you through the process of each, saving you the stress by providing you with tips on how to effectively manage money during the most common major life events.

Marriage

  • Discuss finances early on. If one spouse is a stingy saver while the other is a carefree spender, it can be cause for turmoil in a marriage, especially if the issue isn’t discussed early on. Do you prefer a joint bank account? Separate bank accounts? Or maybe the concept of “Yours, Mine & Ours” is best for you, with one joint account for fixed monthly expenses and two separate accounts for discretionary spending. Be preemptive and talk about how you’ll manage your finances, long before an issue even arises. You’ll both be more likely to address the issue calmly and constructively, and you’ll be better equipped to resolve any future disagreements.
  • Design a budget you’ll both be able to stick to. This depends on how your bank accounts are set up, what your financial goals are and how your spending styles differ. The most important thing to set measurable, attainable goals, and then follow up with weekly money meetings to keep each other accountable and on track.
  • Contribute to an emergency fund, retirement plan and debt payment plan—together. These are long-term goals that should be included in any budget but are particularly important for couples to work toward together. Not only might it be quicker than trying to reach your goals alone, meaning it’ll save interest on a debt payment plan or earn more interest on an emergency fund, but also opens you both up to more options for a stable financial future. For example, if one person has better retirement options than the other, use that knowledge to allocate your resources wisely and maximize your return.

First Home

  • Get help. A buyer’s agent can guide you through the process, finding homes that work for you and your budget. Unlike a listing agent (a.k.a. the seller’s agent), the buyer’s agent is responsible for acting in the buyer’s best interest at all times. Rely on recommendations from friends, family or even your lender, and leverage the expertise and experience that these agents have to offer. The best part is that using a buyer’s agent doesn’t cost you a dime, as the buyer’s agent typically splits commission with the listing agent. What have you got to lose?
  • Allocate for more than just a mortgage. Property taxes, insurance, maintenance and utility bills are costs of homeownership often overlooked making the initial purchase decision. However, if left unaccounted for, these hidden costs can end up breaking your budget. Just by doing a few simple Internet searches, you can find how much property taxes or utility bills in a particular area tend to be. Factor these into the price of a potential house, and then decide if the house is within your price range or not.
  • Don’t spend your entire savings. It’s no new logic that you shouldn’t buy more house than you can afford. If it requires every cent of your savings to make a 20 percent down payment on a particular house, then that might be an indication you should set your sights on a less expensive property. Setting a budget based on how much you can afford you can scrape together means you won’t have money left over for mortgage insurance or other costs of homeownership. Instead, real estate writer Jessi Hall recommends multiplying your annual household salary by 2.5 and setting a price point based on that figure.
  • Go to the professionals. If you’re buying a home, you need to stick with a home loan company you can trust. Veterans United is in your corner.

New Child

  • Don’t buy everything at once. The excitement that accompanies a baby on the way can make it tempting to immediately hit the baby aisles in anticipation, but don’t go buying everything in the store just yet. Friends and family will typically gift or lend items like clothes, a crib or a stroller, especially by the time the baby shower rolls around. Hospitals will typically provide diapers and other supplies after birth, as well as coupons for future purchases of these items. All you have to do is ask.
  • Find free classes. A newborn doesn’t come with a parenting how-to manual, but that doesn’t mean you have to break the bank on books and classes trying to figure it out. From breastfeeding to babysitting, take advantage of the free classes and materials offered by local libraries, hospitals or community centers. Ask your doctor for suggestions on where to find some of these classes in your area.
  • Ask around. Perhaps the most crucial advice is to always ask around. Want to borrow a stroller, get personal product reviews before you buy or just get some general parenting advice? Other parents may be your best resource. They’ll know where and when to buy to get the best deals on diapers, clothes and more. For most baby care items, many agree that borrowing or buying second-hand is usually your best bet.

Job Loss

  • Cut back. This may seem like a no-brainer, but the loss of a job typically means the loss of a paycheck. Rid old spending habits and adjust to a lower household income by creating an entirely new budget with strict spending guidelines. This may prove difficult, but it’s better to be cognizant and proactive now than to handle the hefty consequences of debt later. You can dip into your emergency fund if absolutely necessary, but only do so for fixed expenses; do not use the emergency fund for discretionary or frivolous purchases that can and should be cut out of your budget. Spending from a savings or retirement account should be last resort efforts.
  • Get assistance. Don’t hesitate to ask for help. Options like unemployment insurance can help stabilize the situation, providing basic compensation until you’re able to find new employment. As of 2009, the average weekly benefit is $293 and can extend as many as 99 weeks. Other resources include job-loss mortgage insurance and the COBRA health care plan.
  • Find other income. Whether it be part-time work, self-employment opportunities or even diving back into the full-time workforce, start the new job search as soon as possible. Use the time to polish your resume and skill set, and then get back on the market with a little patience, diligence and a positive attitude.

Medical Emergency

  • Avoid the emergency room. One-third to one-half of emergency room visits are for non-emergencies, but the average trip can still cost more than $2,000. If you’ve got a sprain, strain or other superficial injury, go to urgent care or wait to see a regular doctor instead. You’ll usually get the same treatment for a fraction of the cost.
  • Scrutinize the bill. When it comes time to pay, ask for an itemized list of services with each expense noted next to them. Hospitals and other medical facilities can get chaotic with multiple patients and errors do happen. If you don’t understand or agree with a charge, don’t hesitate to contact the billing department and dispute it. Check the bill’s fine print, too, to ensure you aren’t being billed for something that falls under your insurance coverage.
  • Use your emergency fund. Your emergency fund was established for emergencies, so use it if necessary. It’s a much better option than dipping into savings or retirement plans or racking up credit card debt. If you’re still unable to pay the bill off in full right away, pay as much as possible, and then call to set up a payment plan before the  remainder of the bill is sent to a collection agency. Hospitals and other facilities don’t have to notify you when they do that, so be proactive in contacting them.

Divorce

  • Survey your financial situation. If you and your spouse had any joint assets or liabilities, such as joint accounts, mortgages, investment funds, pensions and cars, you’ll need to determine how they’ll be divided. Pull your credit report to gauge your initial financial standing; then continue to check it as the divorce is being processed and finalized. This is key to ensure that only your accounts or debts show up on your credit report and not those of your former spouse.
  • Find financial security in a new lifestyle. Chances are, you’ll be unable to maintain the same standard of living on a single budget, so adjust your lifestyle accordingly. Establish a new budget for yourself and decide how you’ll contribute to a new emergency fund, retirement or debt payment plan. If your former spouse typically handled the bills, seek the help of a friend, family member or financial adviser on tips for staying on track.
  • Stay calm. Emotions can run high, but leave them outside of the courtroom. Keeping the lines of communication open with a former spouse can be crucial, especially if kids are involved. You’ll want to be able to contact them concerning future expenses, as well as any other financial matters that may arise. Not only will it save you in court costs, but it’ll just make everything substantially easier.

Death

  • Learn the legalities. If you don’t quite understand the legalities of the situation, seek assistance from a professional who does. Their assistance during this time is invaluable. First, decipher power of attorney. This is what determines who has control over the deceased’s finances. If there was a will drawn up before the death, it should already determine how any assets will be divided. Likewise, an estate plan will specify who gets what. In the absence of such documents, it’ll be that much more important to seek professional advice from someone who can guide you through the process.
  • Prepare as much as possible. It may sound morbid, but it’s important to be as prepared as possible, at any time, really. Rising funeral costs alone can be enough to empty the pockets of surviving family members, but being prepared, like by investing in life insurance, can help ensure the financial security of the family after someone dies.