4 Ways to Handle Financial Changes and Transitions

Major life events can sneak up unexpectedly, like an unforeseen loss or medical diagnosis. Other times, life’s biggest milestones arrive after months or years of planning—maybe you’re about to purchase a house, get married, welcome a baby, or start a new job.

Whatever the situation, life changes often come with a period of significant financial transition. Before you make any big money moves, review these tips on how to handle the transition successfully.

1. Pause and reconnect with your priorities.

A time of financial transition often goes hand-in-hand with emotional upheaval; it can be difficult to make sound financial decisions before reconnecting with—or establishing—your own ideals.

So do some soul searching. Give yourself time and space to reconnect with your values and goal and think beyond dollars and cents: During this transition, who do you want to be by your side? How do you want to feel? Where do you see yourself and your loved ones on the other side of the change? What resources do you need to make your vision a reality?

You may not have a clear-cut answer to every question. But starting to reflect on and identify your values will help you find your north star as you navigate the tactical financial decisions that follow.

2. Budget for change.

Consider how your current situation will impact your monthly budget. Do you need to quickly free up money to cover an unexpected cost? Does this life change put you on a fixed income, where previously you earned a variable salary? Maybe you’ve found yourself with a windfall after a child finishes college, and you’re no longer paying their tuition or rent—will you put your money toward a different investment?

Look at your budget early on to determine which financial actions to take now. Once you’ve addressed the immediate considerations, you can zoom out to evaluate your larger picture.

3. Update wills, beneficiaries, and account owners.

Just about every major life event requires some kind of update on a bank account, insurance policy, or key document, like a will or advance directive.

Whether you need to add a new spouse as a beneficiary on your 401(k) or disentangle checking accounts during a divorce, it’s important to cover your bases. Here are some accounts and documents to consider reviewing during a life transition:

• Update or create a final will and testament.
• Update or create an advance directive for medical care.
• Update or designate your healthcare and financial power of attorney.
• Update or purchase insurance policies, including home, auto, and life.
• Run an audit of all your financial accounts, including checking, savings, credit cards, 401(k)s, IRAs, college savings accounts, and other investment accounts. Determine if you need to update beneficiaries or make changes to account ownership.

   

4. Work with trusted financial professionals.

Managing your money during life’s biggest transitions and milestones can feel overwhelming. Fortunately, you don’t have to tackle it alone. Here are some of the professionals you may wish to consult:

• Estate attorneys. These lawyers specialize in helping clients protect their wishes for their money after they die, often by establishing wills or family trusts.
• Tax advisors. Whether you purchased a new home, added a baby to your family, or switched from being a W2 employee to a 1099 freelancer, life changes can bring tax implications. A tax advisor or CPA can help make sure you’re compliant without missing potential deductions.
• Financial advisors. Both independent financial advisors and those at financial institutions can provide guidance and personalized investment strategies tailored to your goals.
• Family/divorce attorneys. In addition to handling family matters such as divorce, child custody, and alimony, many family attorneys also offer mediation to help families reach an agreement during a divorce.
• Institutional support staff. Work directly with a college or university student aid office, medical billing office, or other support teams directly involved in the financial aspect of your current situation.
• Financial therapist. These mental health professionals combine financial advising and mental health counseling to help people navigate stressful situations involving money.

Take financial transitions one step at a time.

Life’s turning points are about more than money. By laying out your values and priorities, covering immediate changes to your budget, updating key accounts, and assembling a team of trusted professionals, you’ll be empowered to handle the transition with confidence and peace of mind.