When it comes to making major life choices, it is important to not just focus on how it will change or improve your life but also consider the financial impact it will have. It can be easy to push those thoughts off until later, but that can set you up for some severe problems in the future.
Looking at the full picture from the beginning will set you up for future success.
Education is one of the best ways to set yourself up to be successful in your future career, but you do need to choose wisely. Student loans can pile up quickly and cause headaches in the future. When you are deciding where to go to school and what to study, look at both the cost and the expected financial benefit. Does your intended career path need an education? If so, how much education? Make sure you also consider the benefits that may be less tangible, such as relationships, access to resources, and a school’s reputation.
If you are considering graduate school, it is important to look at the financial aid you have access to. Unlike undergraduate loans, graduate school loans start accruing interest when they are disbursed to you. At the current moment, student loans cannot be wiped out by bankruptcy and the interest rates can be very steep. Don’t let this discourage you from following your education plan, just make sure you are aware of all the costs involved.
Starting a Family
While children are a blessing, they don’t come cheap. You are going to be responsible for their cost of living for the next 18 years, and many parents want to provide some kind of financial headstart for their children as well. Planning ahead for those costs will make your life much less stressful. Pregnancy and adoption both come with a significant investment that you should save up for, to begin with. You will also need to consider adding your child to your insurance, making sure you can provide the necessities, and providing adequate housing space for your larger family.
Luckily, there are some ways you can receive some financial assistance. You can get a $14,890 tax credit for adopting a child in 2022. There is also the federal child tax credit, which will give you $3600 for every child under 5 and $3000 for every child between 6 and 17 in your household.
Buying a Home
Real estate is a hot commodity. Buying a home is a dream for many people, but it requires some serious financial planning. The sticker price on your dream home is just the beginning. In addition to the down payment, you need to think about the closing costs and any needed or wanted changes to the house.
Once you own the home, you will need to include several new things in your budget, including the mortgage payment, insurance, taxes, utilities, and potentially an HOA payment or a mortgage insurance payment if your down payment was less than 20%. Unlike renting, you will also be on the hook for any repairs that come from normal wear and tear. These are all things that you can handle with the right planning, but if you don’t put in the work to start, it could come back to bite you.
Your financial decisions affect every area of your life, and properly planning for life’s major events is important. Proper planning not only sets you up for success, but it also prevents you from dealing with the stress and anxiety that financial woes can bring.
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