6 Family Events That Mess With Your Finances in a Big Way

Making and sticking to a financial plan is one of the most effective ways to take control of your personal and family finances. Well-planned finances allow you to apply each Shilling with precision as you know exactly where your money goes and why it has to. 

But life works in a strange way, doesn't it? 

Read Also: 7 Financial Emergencies Everyone Must Be Prepared For

Sometimes everything works out flawlessly. Sometimes, even the best plans can't prepare you for all of life's surprises. 

Life will undoubtedly take some unexpected twists; some will be predicted, while others will be completely unexpected. Your financial plan is not a done and dusted deal when you consider life and family’s ups and downs. You see, events in your life, whether good, bad, or ugly, have a significant impact on your family finances whether immediately or not. 

Regardless of your situation, your financial needs are likely to change over time.

Here are six big life and family events that may have an impact on your financial wellbeing, as well as how you can prepare for them.

Having Children

You sure have heard that children are expensive. Yes, they are - nothing has changed about that. In fact, the cost of raising children has been rising.

Many parents overlook the myriad expenses that will be added to their budget when a new baby is born. The good news is that with the right preparation, you can painlessly cover the added expenses while still paying your bills comfortably. 

If you are expecting a first child, you will need to save money for more than simply diapers, clothes, food, and a nursery. You will also need to save for health insurance, future school expenditures, life insurance policy, and other expenses.

To begin, make a list of their anticipated future expenses devise a strategy for saving and investing money to cover these needs, and, most importantly, align that strategy with your budget.

When you have children, you are totally responsible for their care. If you are not prepared, you will undoubtedly struggle financially at a time when you should be excited to have a new family member. 

Read Also: What to Financially Expect When You’re Expecting a Baby

Owning a Home

The majority of Kenyans consider owning a home someday.  

Homeownership whether buying a ready house, taking a mortgage or building from scratch alters your finances significantly, prompting a careful evaluation of your budget. 

Before making a homeownership decision, you should first establish appropriate financial arrangements. Determine where you would want to own a home, boost your emergency savings to allow for unplanned expenditures and adjust your budget to cater to the extra costs that might accumulate along the way.

If you decide to buy a house, you should first figure out your budget and start saving for a down payment.

Read Also: The 9 Routes to Owning a Home In Kenya

When You or Your Spouse Get an Income Cut or Lose Your Job

Life may occasionally take us in the opposite direction of our desires. 

Losing your job or source of income might be devastating especially if you had not set up an emergency fund. As a result, one of the first things you should do while working is set up an emergency fund capable of covering three to six months of your living expenses. 

Read Also: How Much Emergency Money Should a Family Have In 2022

If you lose your job or get a pay cut, you should immediately review your spending plan and cut it as much as possible to maximise the amount of money you have available while hunting for a new job. It all boils down to cutting your expenditure and deferring non-essentials.

Read Also: How to Pay Your Bills After Loss of Employment

The Death of a Loved One

The loss of a loved one may be as financially devastating as it is emotionally draining.

Depending on their financial situation and your relationship with the deceased, you may have to bear the expense of managing your loved one's financial affairs. This might include paying their debts, or footing for the cost of their funeral or hospital bills if there were any. 

Read Also: Alive & Not So Well: Who Will Manage Your Finances When You Can't? 

Retirement

With retirement planning, the earlier you start, the better. That way, you will have more time you have to save. 

Retirement is one of the most significant life events you will face which will also have a great financial and family impact. Even if you plan to work part-time after you retire or open a business, you should consider how your finances and budget will change as you age. 

Read Also: Retirement Plan: Take Advantage of the Magic of Compound Interest

Retirement will have a range of financial consequences depending on how much you have saved for that period of your life. Your pension - if you have one - may be far less than what you used to earn meaning that you ought to be adequately prepared. 

Additionally, you may have to pay extra for medical bills or risk outliving your savings. Retirement planning costs can be decreased by starting as early as possible - especially when you consider the power of compound interest.

Read Also: How to Plan for Retirement While in Your 30s

Inheritance

Research shows that people who are given money suddenly treat it differently than the money they have worked for. 

Knowing what to do with money left to you by a family member in their will might be tricky.

There are several options. If you have debts, pay them off. Use this money to go back to school if that's still an option for you or to invest in your child's education. You can also consider opening an investment account to make long-term contributions towards retirement.

If you don't devote the time necessary to build a strategy for your inheritance, you may find yourself in a worse financial position than you were before you received an inheritance. Only this time, there is no parent standing by to lift you up. 

What you do with the money will be determined by your individual and family position, so don't rush decisions.

Read Also: Family Finance: How to Make the Most of Your Inheritance, Avoidable Mistakes

WRAPPING UP

A myriad of life events may have an impact on your finances.

Making a solid financial plan is the best way to prepare for life's changes. Before you make any financial decision, you should evaluate all of the above possible life events and examine the consequences they may have on you if you did not have the foresight to plan ahead.

By being aware of these family situations, they won't have to be a barrier to you or your family. 

You can handle any of them head-on!