At LearnVest, we offer lots of tips for saving money on the little things in life, from choosing tap water over bottled (a must!) to cutting back on your dry cleaning expenses. These tips are guidelines that I personally live by, and they are important steps toward reaching your financial goals. But, in the end, making smart financial decisions is also about making sure that you get the BIG financial decisions in your life right.
Every time you hit a personal milestone—engagement, graduation, employment—your finances reach that milestone as well. To keep you going on the right track, you must be proactive with your money. The simple fact that you’re reading this means that you’re taking the time to engage with your finances, and that’s a key first step!
Here’s how you can be ahead of the game for three of life’s big financial milestones:
1. Milestone: College Graduation
You’ve graduated from college, moved to a new city, and rented your first apartment. You finally have a place to call your own, but what if someone breaks in and steals thousands of dollars worth of your stuff? What if you accidentally leave a candle lit and start a fire?
The Action: Invest in renter’s insurance. If anything goes wrong with your new home, you’ll want to be protected.
2. Milestone: You Just Got Engaged!
You have a sparkling rock on your finger, but what does that mean for your wallet? What if your future spouse is in serious debt? Should you co-sign on a lease? Should you merge your bank accounts?
The Action: Have a conversation about money immediately. You need to on the same page when it comes to your finances, so be open about all your numbers (credit score, income, etc.). You’re committing to sharing your lives together, so your finances are now connected!
3. Milestone: Employment
You’ve got a new job and fantastic salary to match. Things are great now, but what if something happens and you lose your job? You will get back on your feet, but it would be nice to have some funds to tide you over.
The Action: Create an emergency fund. You should always put aside at least 10% of your income towards savings. A great emergency fund has six to nine months of your living expenses, so you can hang in there until you find a new job.
Be prepared, and realize that every major life event has an impact on your finances. If you take the time to plan for your future, you’ll breeze through those milestones with financial savvy.