Tackle an Unexpected Life Event by Stopping to Breathe
As we move through life most of us live in the now worrying about getting to work on time, what to have for dinner, what sport do the kids have after school, and the list goes on. But what happens when the unexpected happens? Most of us have been there. The loss of a job, an unexpected divorce, or the death of a loved one, these life events can really throw things into upheaval. Throw the word finances in there and you have what most would consider a complete catastrophe. So, how do you navigate the unexpected? How do you keep it together long enough to make the decisions that need to be made in a limited time frame? You pause and take a breath.
At North Main Financial Group, we have worked with many clients as they navigate an unexpected burden in their life. In this three-point sermon we’re going to provide a little food for thought on what to do in the event of the death of a loved one, divorce, and losing a job. While everyone’s situation is different, there are some general principals we follow to help guide our clients. Let’s dive in!
Death of a loved one.
I don’t need to tell you if you have experienced it personally, you know how terribly tragic and challenging the death of a loved one can be, especially if it’s unexpected. There are many things to consider when something like this happens and finances are certainly one them.
The first thing to do is pause and not be in an unnatural rush to do things or make decisions. Sometimes, especially in tragedy, we feel like we need to make a lot of decisions quickly. There may be some things you need to decide quickly but when it comes to the financial end of things, usually not always, you have a bit of breathing room. Take the time to sit and think and make decisions from a financial standpoint in a slower time frame. There is so much involved psychologically and emotionally with the death of a loved one that when we can we encourage folks to take a deep breath and evaluate where things are.
The second thing you want to do is to begin to take an inventory, especially if you are an executor of the estate. While there are different ways to do that, not all of them are easy. It can take as long as three, six and even 12 months to understand where everything is. Get your arms around where accounts are, where life insurance policies are, on what their employer provides. As you have that inventory in place get a handle on the time frame for which decisions need to be made. That’s not always an easy thing to do but sometimes there are specific time frames for when decisions need to be made especially if you’re in a space where estate tax is owed. You may also be able to receive a discount by having things filed for the deceased in a certain time frame. Subsequently, you may have the opportunity to take some deductions so, understand the timing.
Thirdly, begin to re-calibrate what the impact can mean for you financially going forward. We’re talking about things like: Will you sell the home you’re currently living in? Will you continue to work in the way that you have been? Are you going to use some of the proceeds from your inheritance to retire earlier? These are frequent conversations we have with clients at North Main Financial.
Lately it seems like we are having the divorce conversation frequently with clients which is unfortunate. You may have heard that as many as one out of every two marriages end in divorce and even if that’s half true, that’s a lot of marriages that will or have ended in divorce. The financial impact of divorce can be significant so what should you be thinking about?
If you are going through something like this, we encourage you to pause and take a deep breath. While it’s challenging from an emotional and psychological standpoint, it’s necessary to recognize as much as you can what your new reality is. And work through these things with people you trust.
The second thing to keep in mind is to begin an inventory of where things are. If you don’t know already, get an idea of where things are from a policy, investment, checking/savings account standpoint. From the other side of the ledger, understand what your expenses are. Do you have a mortgage, car loan, school loans, private school, etc. What are you financially responsible for?
The third point is to get your team of advisors around you. We strongly encourage folks who are going through, in the middle of, or thinking about a divorce to look for legal advisors, tax advisors and financial advisors. Look for folks you trust. This can often come from a personal referral from someone who has gone through a similar situation. At North Main Financial, we have a network of people we work with so we can provide recommendations to our clients for other services they may need. So, look to trusted family, friends, advisors to help you round out your team of professionals if you don’t already have a team in place. Make sure you are getting the very best advice you can with regards to your situation.
Unexpected job loss.
If you have ever experienced a job loss, or are experiencing one now, you know it’s challenging to say the least. We take great pride in our work and being able to provide for ourselves, our families, and our loved ones and when it comes to a screeching halt it is jarring. When you receive that notice the first thing you should do, we’ve stated it above, is to take a deep breath. There are a lot of decisions that need to be made but they don’t all need to be made at once. Gather your thoughts and make sure you are in a good space to make the decisions you need to make.
Second, make sure to take inventory of where things are. Understand what type of benefits are available to you from your former employer. Things like a severance, unemployment and benefits may be available to you for a determined amount of time. Get a handle on what the benefits are, and the time frames you need to make decisions about them. Also understand what options you have when it comes to health insurance and programs like COBRA.
Lastly, get an understanding of what your financial life looks like going forward. If you are at an age where you can retire early, maybe that’s a consideration. Or you may have to look for another job so know what kind of income you need to earn and in what time frame you need to earn it.
As the saying goes, expect the unexpected. Many of us will see at least one unexpected life event if not several and while it’s challenging from a psychological, emotional and physical standpoint, the rough waters can be navigated. Whenever the unexpected happens stop and take a breath then take an inventory of things. Lastly, have a strong and trusted team around you that includes not only professional advisors but family and friends as well.
Interested in hearing more about this topic? You can listen to the full episode of the North Main Financial radio show on WSIC by clicking here: When The Unexpected Happens (7/20/19).
If you have questions about your financial goals, or would like to talk with us further about our services, give us a call at (704) 987-1425 or visit us at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.