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By Kimberly Lankford, GoBankingRate featuring Samantha J. Garcia, CFP®, AIF®, CDFA®, Wealth Advisor at Halbert Hargrove

When you make a major life change — such as getting married, having a baby, getting divorced, buying a house, switching jobs or retiring — you need to adjust your finances, too. Not only will you have different expenses, but you may also have new opportunities to save. If you spend some extra time preparing financially, you can afford to make the life changes you’ve dreamed about or you can weather an unexpected change without derailing your long-term goals. The following steps can help you prepare for a major life change, take advantage of new opportunities and rebound financially from changes you weren’t expecting.

“Life is a winding road and not a straight shot – there is always going to be some kind of unknown, and that’s where being proactive is helpful,” said Samantha Garcia, a CFP and wealth advisor with Halbert Hargrove in Long Beach, California, who specializes in helping widows and people going through divorce.

Build Up a Financial Cushion

Building up an emergency fund ahead of time can help no matter what type of life change you experience — whether it’s a change you’ve planned long in advance (such as marriage or retirement) or a sudden change (such as divorce, job loss or death of a spouse). Having that extra cushion of money can help you cover your bills while you adjust to your new reality. Try to keep three to six months of expenses in a separate account that is easy to access when needed, such as an online savings account or money market account. “If you’ve built up a healthy savings reserve in an emergency fund, that should be able to carry you through,” Garcia said. “You do the prep work because when things happen, it will be less stressful.”

Prepare Your New Budget

“Be realistic and open about the changes that are coming,” Garcia said. “Understand what the actual expenses may be.” If you’re having a baby, for example, estimate how much you’ll need to pay in child care, diapers, clothes, supplies and other expenses. Will you work less and need to make up extra income or replace employee benefits?

If you’re getting divorced, ask yourself some tough questions about your new financial situation. “Be realistic about whether you can afford to keep the house and your lifestyle,” Garcia said. “What is the actual amount of money coming in, what do you need to survive and live, and can you continue the lifestyle that you’ve had?”

It’s easy to focus on the life change itself rather than the finances, but preparing financially can help take some of the stress out of the transition. “Knowing where your money is going is critical when planning for a life change, and it will help you stay on track for your next big step,” said Alissa Van Volkom, head of U.S. consumer deposits, products and payments for TD Bank. “Before and during a major life change, it’s important to focus on building savings. For many this will require some refinement to current budgets, and one of the easiest ways to evaluate spending is to first review essentials and what is needed to cover those costs. Determine your essentials, budget appropriately, and set aside the extra dollars. Stick to your plan and set up regular recurring contributions to your savings accounts.  Saving is about tradeoffs and while a big change is looming, you may decide that some of the ‘nice to haves’ aren’t necessary in the short term. Trade those costs in for savings, and you’ll have a stronger financial foundation for life changes.”

Adjust Your Other Financial Goals

You may want to buy a house or retire in a few years, but your life change may affect your ability to reach your longer-term goals. If you’ve had a baby and have a lot of new expenses, for example, you may not be able to afford to save as much for retirement for a little while, but don’t let that get you off track for saving permanently. “When I had my son, we weren’t saving a lot of money because of the changes and the one-time purchases when you have a baby, and it’s being flexible about that – for a short time, maybe my savings is going to suffer, and knowing there is a light at the end of the tunnel,” Garcia said.

It’s easy to lose track of your long-term financial goals when you’re dealing with the current challenges of a life change, but even if you do temporarily shift your focus, continue to think about the future, too.

“Revisit your goals. It’s important to keep your long-term goals in mind and don’t let emotions and temporary changes derail your focus,” said Marcy Keckler, senior vice president, marketing and financial advice strategy at Ameriprise Financial. “If you haven’t set goals, now would be a good time to define your dreams for the future, both short and long-term, and write them down. Written goals are a key step toward making your plan to achieve them.”

You may need to change some of your goals after your life change — and it’s a good idea to review those goals and your progress toward reaching them regularly.

“You have to allow yourself some flexibility because your goals are going to change,” Garcia said. “Continually reevaluate, whether every quarter, every six months or every year. Where are we today, and is that five-year goal that we had last year still appropriate? Can we save more, or have circumstances changed and we have to back off – maybe that’s a seven-year goal now. You have to be flexible.”

Make the Most of Employee Benefit Changes

When you have a life change, you may gain access to different employee benefits — such as your spouse’s health plan when you get married or new options when you switch jobs or retire. Reassess your health insurance and other employee benefits every time you make a life change. For example, when you get married, you may find that shifting to your spouse’s health insurance is a better deal than remaining with your employer’s plan, especially if his or her company subsidizes much of the premiums for family coverage. When you have a baby, study both spouses’ health plans to decide which one provides better coverage for the child, and find out whether either employer offers other valuable benefits for parents, such as a dependent-care flexible-spending account that lets you set aside tax-free money for child care costs.

If you move or start a new job, assess all of your new options — for healthcare, insurance, retirement plans, flexible spending accounts for medical expenses and child care costs, and any commuter benefits. Your employer may match your retirement plan contributions in a new job, making saving in that 401(k) an even higher priority.

Adjust Your Beneficiary Designations and Estate-Planning Documents

Your beneficiary designations on your retirement accounts and life insurance determine who will inherit the money, no matter what your will says. If you don’t update your beneficiaries when you have life changes, the money may not go to the person you want. Make a list of all of your retirement accounts and life insurance policies, and make sure the beneficiary designations align with your current wishes. It’s easy to forget about old retirement accounts at previous employers.

“One of the most important things you do when a divorce is final is update your beneficiaries,” Garcia said. “Do you want your ex-spouse to inherit your money?” It’s also important to update the beneficiaries on all of your accounts when you get married. “If you had an IRA you started in college, how many times are your parents the beneficiaries, and now you’re getting married,” Garcia said.

It’s also important to update your estate-planning documents, such as your will, healthcare proxy and any power of attorney when you get married, divorced, widowed or if you move to a new state that may have different rules. And review the documents regularly to make sure they still reflect your wishes. “Even if you’re not going through a major life change, go through your estate-planning documents and insurance coverage every five years and make sure it’s OK,” Garcia said.

Consider Working With a Financial Advisor

Life changes can be an emotional time, and it can help to have an expert who can review your budget and your financial plans objectively. “A financial professional can help you navigate financial milestones and can provide you with personalized advice to help keep your finances on track as your life changes,” Keckler said.

Getting financial help can be particularly timely when you get divorced or lose a spouse and the person you usually make important decisions with is no longer there. “One of the things I counsel those getting divorced and widows is that’s not always a great time to make huge life decisions,” Garcia said. “My role in that situation is to be their logic.”

For example, you may need to review your budget and determine whether you can afford to keep your house after your spouse dies, but you can take some time to think things through and work with your advisor to figure out what you can truly afford. Garcia said, “I often caution widows to wait a year” before making any big changes, such as selling their house. “There’s a lot of change, especially if they’ve been married a long time, but sometimes they feel like they need to do something, such as sell the house, and then a year or two later, sometimes they regret making those emotional decisions,” she said. “We believe in having a team of professionals around you that may not be emotionally tied to your decisions and can talk logically.”

Many times, the financial advisor can help you focus on questions that may be difficult to think about — but important to help you get through the life change financially. “One of the things we strive to do is to have these fearless conversations with clients,” Garcia said. “None of these things are fun to talk about – how are things going to change if I get divorced? What’s going to happen when me or my spouse dies? [B]ut it’s important to be realistic, be flexible and have those fearless conversations.”

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