Everyone goes through transitions in life, ready or not. Moving, switching jobs, getting married, having children – each one creates additional financial challenges. Some of life’s changes are foreseeable, while others catch us unprepared. Taking the necessary precautions is key to ensuring your financial stability amid these shifts.
For me, 2014 is the year of transition. As the year began, my husband, Brian, and I faced a mountain of change. I started running my firm, Workable Wealth, full time. Brian was about to close out his 10 years of service with the Navy, and take a job in the civilian sector. To top that off, we somehow got an itch to put our downtown San Diego condo on the market, and enter the family planning stage of life.
What ensued was frenzy and chaos in the early months of this year. It was damn near impossible to master every challenge. Financially, we had the cushion for transitions we expected, but there are always curveballs. For example, we sought a fertility specialist after we learned that the family planning was not as easy as we thought. That led to a whole new set of tests, treatments – and costs.
Handling life’s transitions is stressful. Take the following four steps to coping with the change and avoiding financial distress in such uncertain times.
Communicate. The first thing you do for your finances (and your relationships) is to talk about your wishes and plans, whether with your spouse or family members. Take the time to craft your opinion on topics, and then come together for a conversation. Keep an open dialogue throughout this process.
Prioritize. Think about what the most important thing is for you right now. Your goals may include paying down debt, building an emergency fund, saving for retirement and buying a new house. But you can’t do it all – at least not all at once. Select a few items to work toward first. Good communication is essential in this step. Ask these questions when you sit down with your partner.
- What is most important to you? Why?
- What do you think makes the most sense financially?
- If we work toward this goal first, at what point would you feel secure to move on to the next?
In my case, it came down to Brian securing a job, instead of moving, because we don’t know where he is going to end up. We hoped to stay in San Diego, but ultimately, had no idea how it would turn out. We decided to tackle his job search first and delay planning the move.
Have a plan, get a head start. Put the time in to prepare and do research early for any kind of financial transition to avoid the last-minute scramble.
When it came to the job transition, Brian started networking, reaching out to friends and old colleagues to learn about the opportunities available months in advance, instead of waiting until he left the Navy. When it came to the house search, there are a ton of communities to consider. We made a list of possible areas and started to get more familiar with them before we are ready to list our property in the next few months.
Adjust your plan. Your plan may not always work out as initially drafted. Your financial life is not a straight path from A to Z. It’s more of a jungle gym with ups, downs, crossovers and crossbacks throughout. Pause every now and then to examine and adjust your plan.
Financially, my husband and I were prepared for career changes and a new home purchase, yet we never thought to consider fertility treatments and the high costs that come along. Thankfully, we were able to take them in stride with a few tweaks to the plan. We had a savings in place and an idea of what we can and can’t afford, so this news didn’t turn into a big obstacle.
Transitions are not easy. Tackle them with the right plan and steps to minimize financial strain so that you can focus on the new adventures in the next stage of life.
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Written by Mary Beth Storjohann, CFP, founder of Workable Wealth, an RIA in San Diego. She is a writer, speaker and financial coach who is passionate about working with individuals and couples in their 20s and 30s to help them organize and gain confidence in their financial lives. She has been quoted or featured in various industry publications on the local and national level. You can find her on Twitter at @marybstorj.
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