Preparing for Major Financial Events

Preparing for Major Financial Events

Many life stages are directly related to (or cause) financial responsibilities that occur at the same time. Preparing for the financial aspects of these events can help to reduce the stress that often accompanies major events.

Remodeling Your Home or Making Major Repairs

Home equity loans and lines of credit have become major sources of funds for home improvements. The application process is usually easy and inexpensive. Plus, the funds are often available on when needed, enabling you to avoid paying interest on funds you don't immediately need. Home equity loans and lines usually have attractive interest rates, and the interest may be tax-deductible. If you are considering a major home improvement, you may want to investigate these two attractive funding options.

Buying a Home

Buying a new home can be one of the largest financial decisions of your life. Investigating the mortgage options early in the home search process can help you focus on a home you can afford. It can also help keep you focused on the purchase negotiations. Talk to a lender to receive a pre-qualification letter, learn what the current rates are and discuss how much your monthly payments would be for different mortgages.

Changing Jobs

It is seldom easy to change employers. New responsibilities, new co-workers and new environment can be stressful. In addition, you will probably get a distribution from your old 401(k) or other employer-sponsored retirement plan. Once you get that distribution, you have important decisions to make. You must move the funds into another qualified plan or IRA within 60 days to avoid paying taxes on the distribution. This comes with many important investment decisions. A retirement plan distribution is often the largest single sum an individual ever has to invest at one time. If changing jobs is in your near future, investigate your options to make the transition less stressful.


After a career, venturing into retirement brings many financial changes. Along with Social Security benefits, your existing assets must pay for a major portion of your living expenses, which will likely fall somewhat, perhaps by 20 to 30 percent. At retirement, you will probably want to modify your investment strategies to be more conservative. While you are young and still accumulating assets, it can be easier to absorb a fall in the value of your portfolio because you have time to recoup your losses. But during retirement, a significant fall in your portfolio can be troubling. Consider a more conservative asset allocation with more of your funds in cash and shorter-term, fixed-income investments.

Funding a Child's College Education

The cost of a four-year college education is expensive college costs at private institutions can exceed $30,000 per year. The cost of state schools also can be staggering. Paying those college bills can be tough if you do not start saving early. Make time your friend by establishing a regular savings program and taking advantage of some of the new tax-advantaged programs like Coverdell Education Savings Accounts (Education IRAs) and Section 529 Plans.


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