4 Financial Strategies for Life’s Biggest Moments
Managing finances during life’s major events isn’t always easy. Whether planning a wedding, buying a home, or welcoming a new bundle of joy, strong emotions — even positive ones — can affect your judgment and lead to overspending. Here are four strategies to help you navigate life’s biggest moments without derailing your financial future:
1. Revise Your Budget
Establishing a spending limit for life’s milestones while considering other financial obligations is key to responsible money management. Estimate the costs of anticipated events and note how soon they are likely to occur. Include a minimum buffer of at least 4% to account for inflation. Compare household income and expenses to determine how much you can allocate each month toward major life events while maintaining your day-to-day expenses.
2. Set Goals
Frivolous spending in the moment might seem fun, but the future will be here before you know it. Plus, large financial goals are easier to achieve when you start saving for them earlier. For example, while setting a retirement savings goal of $1 million by age 50 seems daunting, it typically requires less budgetary effort to start saving for this goal when you are 25 instead of 35.
Defining specific targets today helps you stay motivated when the end goal is years or decades away. Automatic saving tools like direct deposit contributions can help you prioritize financial goals before spending money on nonessentials.
3. Tackle Debt
Eliminating or reducing debt makes every savings dollar go further. The less debt you have, the more your income can be used to achieve your financial goals. If you have high-interest rate loans or credit card debts, create a realistic plan to pay them off as soon as possible. This might include working overtime hours or a second job. Revise your budget so it prioritizes debt payments over saving goals.
4. Stay Flexible
Financial emergencies, inflation, or other adverse economic conditions underscore the importance of adaptability as you anticipate major life events. Following a budget and sticking to your savings or debt reduction goals is crucial, but accept that you might need to temporarily alter your original plans. If you experience a reduction in income, consider lowering your monthly financial targets instead of abandoning your goals altogether.
Planning is central to meeting your goals. Schedule a free, no-obligation appointment with MEMBERS® Financial Services. A financial advisor can provide insight into how upcoming events might affect your finances.