Reassessing Personal Finance – The New York Times

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If you are thinking about a career change, starting your own business, or any other major life change, it could be costly, at least in the short term. At a minimum, “you should have a spreadsheet of bills and things you need to cover, no matter how the business or side business is,” Timmerman said. Try to have a good idea of ​​how many months you can cover these bills from your savings, she said, or what you will do instead to pay them off. This could mean selling your car or moving to less expensive housing.

Whether you’re dreaming of transforming your pandemic-related job into a new career and need to figure out how to pay for it, or you just want to feel like you have a solid financial foundation, planners say you usually have three main financial aspects to be assessed. first.

“If someone has an emergency fund, has no high-interest debt and sets aside a decent amount for retirement, he is in a good position to make big changes,” said Brian Walsh, senior manager of financial planning at SoFi. engaged in online lending. run. “If they don’t have these boxes checked, they should be more careful.”

CREATE AN EMERGENCY FUND In the past, planners generally recommended that people have three to six months of spending in an emergency savings fund to bear during difficult times. Some are now suggesting that the fund can keep you afloat for up to a year.

“The board is now even more conservative,” said Dan Herron, a certified financial planner and co-founder of Elemental Wealth Advisors in San Luis Obispo, California. “Covid has just happened, it is still here, and what to say that something else is not on the road, which is even worse? “

Your emergency fund should cover basic expenses such as rent or mortgage payments, utilities, food, and transportation. You should also set aside enough funds to cover your monthly health and auto or homeowner (or renter) premiums, as well as credit card payments or other debt payments.

Whether your savings are healthy or trying to support them, the same advice applies: Set a monthly savings goal and stick to it. Better yet, funds are automatically withdrawn from your bank account every month and deposited into your savings, retirement, or brokerage account.

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