3 Steps you Must Take After a Life-Changing Event

While the only two certainties in life are death and taxes, life-changing events run a close third. At some point, everyone will have a moment where their life shifts in a big way. Many people automatically associate this kind of life-changing event with catastrophes such as getting laid off or your house burning down, but good things like getting married or getting a big promotion also count as life-changing events.

Regardless of whether a life-changing event is good or bad, though, there are some steps you’ll need to take after it happens. You don’t need to take them immediately, but the longer you wait the more you risk getting overwhelmed by your new circumstances.

Update Your Budget

Good or bad, a life-changing event almost always affects you financially, and the sooner you know where you stand financially after the event, the better prepared you’ll be to act. The best way to assess your financial standing? Get out your monthly budget and update it.

If you discover you’ll be bringing in significantly less income, for instance, you’ll want to match your existing budget against your new level of income and start making cuts wherever possible. You might have to find some creative ways to reduce expenses or even give up some luxury items entirely.

On the other hand, if you have a sudden large expense, you may need to use a credit card or dip into your emergency fund to cover it. Once you’ve got the expense paid off, you’ll want to look into what temporary cuts you can make in your budget to help pay off your credit card debt or rebuild your expense fund.

Of course, as previously mentioned, life-changing events can be positive. If you’ve just gotten a new job with a significantly higher salary, you can see what budget categories you’d like to increase. If you’re getting married, you can talk with your partner about making a budget and using your combined incomes to pay for your common expenses, like your house payment and utilities.

Create your new budget with our free budgeting worksheet.

Review Your Goals

Once you know where you’re currently at financially, you can start looking towards the future. If you have any financial goals, now is the time to review them.

If you’re dealing with a catastrophe, you may want to delay some, if not all of your financial goals. You might want to use the money you were putting towards your goals to pay off a major expense, for instance, or you might have to prioritize one goal over the other depending on your income. If you’ve made your goals SMART goals, you’ll have an easier time rescheduling them.

Of course, if you’ve achieved a huge financial goal or have more money to put towards your goal, you can start looking at how you can use your extra money most effectively. If you’ve bought the house you’ve always wanted, for instance, you can use the money you were putting toward a down payment to pad out your emergency fund for home repairs or put it towards another financial goal entirely.

Figure out Your Next Step

Now that you’re aware of your financial situation and you have an idea of where you stand with your goals, it’s time to figure out your next move. This will be immeasurably easier if you’ve taken the previous two steps.

Obviously, the next move you make is heavily dependent on the life-changing event you’ve been through. If you’ve been laid off, for example, you’ll want to start searching for a new job, while if you’ve just bought a new house, you’ll want to think about how you’ll furnish it. Regardless of what step you take, make sure it’s moving you in a direction that’s taking you toward your goals.

Navigate Life-Changing Events With First Alliance Credit Union

Life is rarely static. Changes can happen at any time, and some of them are literally life-altering. When one of these changes occurs, the best thing you can do is stop, figure out where you are currently and reassess your goals. Once you’ve done that, you can figure out your next move.

You can help prepare for a life-changing event when you become a member of First Alliance Credit Union. You can keep your emergency fund in a traditional savings account or money market account or take out a personal line of credit to help you cover any unexpected expenses that may arise.

Questions about managing your money? Ask us!