Life Happens Part 2: Take Charge of Your Personal Finances

Some life events have a way of shaking your financial confidence — for good or bad. Read on for ways to approach personal experiences that can truly make an impact on your finances.

Marriage. Combining two lives and creating a new family is a big life decision — and one that has ample financial implications.

• Determine if your finances are married, too. Just because you’re married doesn’t mean your finances have to be. If each of you has your own budgeting style that works, explore the option of keeping things separate. If you want to combine resources, come up with a plan before you start moving things around.
• Decide on financial goals. Working toward financial goals as a couple is a great way to not only ensure you achieve them but also to build better financial habits. Saving for a home, figuring out how much car you can afford or budgeting for an upcoming vacation can be a lot easier if you have the end goal in sight.

Divorce or Separation. Ending a marriage or significant relationship and dividing a household is a serious decision with potentially great financial impact.

• Research expenses. Knowing the legal implications of your decision to part ways is powerful as you navigate your divorce. Make yourself aware of the cost of attorneys, tax consultants and any other professionals you might need to work with when dividing everything up. Also, remember to factor in expenses related to real estate and lease agreements or possible transportation needs.
• Simplify your spending. Until you know the grand total of your split, it’s worth it to cut back on any extra expenses. Spending smarter now will allow you to move through the process without having to worry as much about affording unknown costs that come up later.

Family. When your family gets a new addition — whether you have a kid, your grown child moves back in or your aging parent needs to stay with you — financial situations change.

• Keep an eye on spending habits. It can be challenging to know how much the newest addition to your household is affecting your wallet until you take a look. Seeing that you spent more on groceries, utilities and entertainment after they joined the house can help you plan for future months.
• Reevaluate your savings. With new household members comes the possibility of a greater need for savings. You’ll also want to increase your expected budget for vacations and determine costs related to their education, medical expenses, care and transportation. You may even need to move into a larger home or remodel for senior safety.

Tragedy. No matter what it is, a family illness or loss is a difficult time for everyone. And it can be even more challenging when dealing with financial repercussions.

• Be strategic with payments. Start by looking at interest rates and other factors that could increase prices on expenses, and use that to determine what to pay first. If that means using your emergency fund, that’s OK. Consider reaching out to a financial professional or creditors to understand next steps or create manageable payment plans.
• Manage your lines of credit. It can be easy to hand over your credit card when trying to get things squared away, but racking up credit card debt is the last thing you need when going through a tough time. Regularly check your statements and bank accounts to ensure you’re covering what you’re spending, and try to monitor spending as much as possible while you sort things out.

WHAT TO DO

Be brave and confident in your decisions. In another story, we look at a few pivotal career changes that make revisiting your approach to finances a good idea. Either way, we encourage you to stay positive and try new things that could help lead to a more secure financial future.

By Allison Scott, GM Financial

GM Financial’s Allison Scott is committed to steering people in the right financial direction. When she’s not shifting gears at work, you can find her listening to John Mayer, cracking “dad jokes” or watching the Dallas Stars.