Whether it’s getting married, becoming a parent, changing jobs, entering retirement or facing other big events in life, knowing how to best prepare for the expected and unexpected can help make the transition smoother.
Here are a few ways to start preparing now for whatever life might throw at you.
Make a budget
Knowing how you spend your money is one of the primary ways you can be better prepared for the future. Start by writing down your income and expenses (or entering it in a spreadsheet or app) and compare what you are earning with how much you are spending. Compare the numbers over time, whether that be a month, six months or annually. Ideally, spending much less than you make is where you want your finances to be.
If the totals of income and spending are close and you find there isn’t much left over each month, it’s time to evaluate what expenses can be reduced or eliminated.
Creating a budget during every phase of life is especially important when considering potential future financial burdens such as medical expenses, car repairs, etc, says Investopedia.
After you have created a budget that ensures you are spending less than you make, create a plan to start saving.
Save as much as you can, suggests The Balance, above what you invest through employer-offered plans such as a 401(k) or individual retirement accounts.
If you find saving difficult, make a goal to start saving just enough to where it starts to feel uncomfortable. Leave yourself enough to splurge once in a while, but not every day. Eventually, as you get used to this habit, increase the amount you are saving. Having a healthy savings account outside of employer-offered plans allows you room to breathe should large expenses or emergencies arise.
One of the best ways to help plan for life’s big changes is to avoid unnecessary and/or excessive debt. Having excessive debt is not only stressful for individuals but can cause major problems in marriage relationships.
Avoiding debt can help you survive other stressful situations by not adding this financial issue to other things you are trying to handle.
Get adequate life insurance
Although you likely will not die prematurely, it’s a wise choice to secure a robust life insurance plan that will cover whatever potential financial burdens could be placed on your family should something happen to you — especially once you have children.
“The death benefit can be used to pay off debts (e.g., a mortgage, car loan, credit cards), support your child, and meet other expenses. Some of the funds could also be set aside for your child’s future education,” explains the Military Benefit Association. “The cost of an individual policy typically depends on your age, your health, whether you smoke, and other factors. Even if you already have life insurance (through your employer, for example), you should consider buying more now that you have a baby to care for. An insurance agent or financial professional can help you figure out how much coverage you need.”
Create an estate plan
While life insurance is a great way to start crafting a safety net in the case of death, having an estate plan in place is also essential.
An estate plan outlines directives for what to do for medical needs, dispersal of assets, who will care for any children left at home and so on, explains The Balance.
When an estate plan isn’t established, contention and confusion can result, leaving families in disarray as they try to sort out what to do with your assets, or even get access to accounts in your name.
These basic tips are often overlooked, making each of life’s challenges feel more like a crisis. For example, Life insurance is frequently ignored until it becomes a very expensive option. Reach out to Military Benefit Associationtoday for more information on how to best insure your family and prepare for the future.