Facing Milestones When Money’s Tight


When most people think about financial decisions they make during their lifetime, there are a few that should be on the list but probably aren't.

That's because the many important decisions we make that have a large financial impact are made with money as a secondary concern. Here are four life decisions in which you can either save a fortune or end up digging yourself into debt so deep, you could spend more than a decade trying to remedy the situation.

College: Most kids graduating from high school and heading off to college have no idea they are making one of the biggest financial decision of their life. Cost usually is not a concern -- how to find loans are.

While it's possible to graduate from college debt-free, it's even easier to leave school with tens of thousands of dollars in loans.

Graduating without loans allows you to enter the workforce and immediately put aside a small amount of your paycheck toward retirement when it's most valuable to do so. Those with college debt will spend a decade or more paying back the loans with interest instead of earning the interest for themselves.

Wedding: Weddings are supposed to be about love and romance, but they are also a good indicator of how your finances are going to end up during your married life. The best financial decision you can make is to skip the wedding altogether and put the estimated cost toward your retirement fund.

If eloping isn't an option, you will either create a wedding budget and pay for it in full or end up going into debt to fund it. While having the wedding completely paid for won't give you the head start that eloping will, it will still be much better than if you finance the big day with loans.

The way you handle money for the wedding will be a good indicator of how you and your spouse will end up managing money together. Going into a partnership debt-free makes it easier to reach your mutual goals than if you start day one in debt and continue to build on it.

Kids: While money is rarely the primary factor when deciding whether to have kids, the fact is that children are a huge financial commitment. Even the most financially prepared parents will dramatically change their financial lifestyle to accommodate the new member of the family.

The difference between those who have financially prepared for the new addition and those who have not will often mean having the money put aside for the major expenditures that come with kids or living paycheck to paycheck and always scrambling for a way to pay for the costs that never end.

Unlike some of the other life events, kids are around long term. This allows parents to adjust and learn how to better handle their finances over time with kids, but even taking a few years to learn how to better financially cope with children can put your finances in disarray and take years to recover from.

Divorce: When it comes to divorce, emotions are usually running high and what is in the best financial interest for both people is rarely a top priority for either individual.

The simple answer to come out the best financially for this life event is to not get divorced. Since this is sometimes not an option, you should hope that you wrote a prenuptial agreement that you both felt was fair and balanced. This might not keep all the money from going to lawyers but should help in limiting the amount that ends up going to others.

If there is no prenuptial agreement and emotions take over, the net worth of both individuals will likely be hurting for years down the line.



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