Change is inevitable. We change jobs, move house and start families. We can be struck down with sickness, go through a divorce, or even lose a family member. Some of these things may happen, but some of these things will happen, it’s all just a matter of time.
There is not much that stays exactly constant in our lives, and finances can be a moving beast even if you have a perfectly set out budget and financial strategy.
When a major life changing event occurs however, it will usually take more adjustment than just increasing or decreasing one expense.
A big change can have a big flow on effect and will usually mean you need to reestablish your whole financial strategy before you can move forward confidently.
So, what do you need to do to move forward, and how do you restore your finances after a big change?
Figure out where you are now
This is where you throw it all on the table. Where are you at financially right now, right after the massive change has occurred? Write it all down. Do you have debt? Excess cash? Higher or lower expenses? Plans for the future that need to be accounted for?
Whatever your change, this may mean a complete deviation from any previous plans or budgets that you have created, so be prepared to pull apart what you currently have. If you have a financial adviser, then you have the advantage of going through all of this with them. They will know how to tackle your new situation the best way.
Review all of your expenses
If you situation has changes, then maybe some of your expenses have too. Now is the time to call your insurance providers, banks and lenders, internet and phone providers to see if there is a better or more appropriate deal based on your new situation. Most of these companies will be willing to negotiate cheaper rates if they think you are at risk of leaving them. Don’t be afraid to shop around either. A few hundred dollars here and there will make a difference to the bottom line.
A big change can have a big flow on effect and will usually mean you need to reestablish your whole financial strategy before you can move forward confidently
Set in place the new structure
Once you have pulled everything apart, you need to start from the basics again and build up. Firstly, you need to figure out what your absolute mandatory expenses are (food, accommodation, bills) and set aside money in your budget each pay period for all of these ongoing and yearly expenses. Once the mandatory requirements have been taken care of, then you are able to figure out where to direct any excess cash that you have. It might be towards debt, or a new goal that you have. Write down all of your goals financially speaking, and then rate the importance of them with 1 being the most important and work your way down. This will help to create a clear vision as to what your money should be directed towards.
Get an outside perspective
As mentioned above, seeking out a professional for this kind of thing is a real asset. A good financial adviser would have seen so many different situations and will be able to give you an outside, non-emotional perspective on your new situation and be able to create a plan going forward for you. Big life changes like buying or selling a house, change in family structures and changes in jobs are the typical reasons that people will seek financial advice. A good financial adviser should be able to help you through any and all stages of your life.
Do you need to update your other stuff too?
Getting your finances sorted is one step in the process but you may also need to consider any of the other peripheral parts of your life that could be effected by this change. Does your Will and/or Power of Attorney need to be updated? Are your bank accounts, credit cards and loans all in the correct names and structures. Do you need to update your payroll department with any changes in accounts, super funds or salary sacrifice arrangements?
If you are in the midst of a major change, then work through the above 5 tips, to reset yourself and start moving forward again.
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