Fidelity Smart MoneySM Playbook

How to help crisis-proof your life

Weighing your next move

Big life decisions can be hard even in the best of times. But if you aren’t sure what the next few months or years will bring, planning for a major milestone, such as buying a home or switching jobs, can be overwhelming. You don’t have to stay stuck. Knowing the right steps and getting organized can help you move forward.

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Select one or multiple life moments for tips on planning your next move—even if you can’t see the future.

Here’s what to if you can’t pay…

Select at least one of the options.

What big decisions are you considering?

Buying a home Paying for a wedding Getting divorced Growing your family Changing jobs Working for yourself
Next

Buying a home   

Waiting for home prices and interest rates to feel “just right” might be wishful thinking. 

Understand your housing market. Research mortgage interest rates and home inventory in your area. If rates are high and inventory is low, you might have to pay more than you expect. Budget accordingly.

Determine what you can afford. Aim for a house price of 3 to 5 times your household income, depending on how much debt you have.

Check your credit score. If your credit score is below 680, your interest rate—and therefore your monthly mortgage payment—could be higher. You might want to pause house hunting and work on boosting your score.

Factor property taxes into your budget. Check a home's property tax history—those taxes are likely to keep rising.

Ask yourself how long you’ll stay in your home. If it’s less than 3 years, the one-time costs of buying (broker fees, mortgage origination fees, and title insurance) might not be worth it.

Don’t panic over higher interest rates. Refinancing to a potentially lower interest rate a few years down the road is an option, but you’ll pay closing costs each time you do.

Consider holding onto a cash cushion of $1,000 or more. Think twice before cleaning out your emergency savings for a down payment, especially if you’re unsure about your future income.

Learn more about deciding whether to rent vs. buy and how much house you can afford.

Paying for a wedding  

Many people learned the hard way that “save the date” can be more like a suggestion.  

Give yourself an out. Don't send save the dates or pre-wedding party invitations (such as to an engagement party or bridal shower) until you’ve finalized your wedding guest list. This will give you more flexibility if you need to trim your total for the reception.

Read the fine print. Check every venue and vendor contract thoroughly before you sign so you know what you're on the hook for and when, plus what the cancellation policies are.

Build a buffer into your budget. That way, you'll be prepared for last-minute expenses.

Understand your options for paying. Check, cash, credit card, digital payment? Ask if there are fees associated with any of these options.

Ask prospective vendors how they handled the pandemic. Did they issue refunds? Offer reschedules? Or did couples lose money? This could give you an idea how they’ll handle a potential future disruption.

Beware of counting on others chipping in. They could pull their contribution at any time and leave you stuck with the bill. (This could be more likely to happen in shaky job markets.) Know exactly how you'll fund your celebration if other contributors don't fulfill their promise.

Looking for ways to save on your big day? Check out our tips.

Getting divorced  

Considering a divorce? Build a support team and understand your finances.   

Surround yourself with people you can trust. This could include a lawyer, a mediator, a financial planner, or a realtor, but also friends, family, or a therapist.

Get a full picture of your assets. Gather statements for bank accounts, brokerage accounts, retirement accounts, credit cards, mortgages, and any other loans. Do the same for all your income sources. Depending on your state’s laws, and the length of your marriage, you might be entitled to half of all assets acquired during the marriage or brought into the marriage.

Look to your financial future. Learn about splitting assets in a divorce and spousal or child support so you can start planning for your next chapter. Explore what-ifs, perhaps with the help of a financial, legal, or tax professional.

Maintain insurance and other coverage. If you’ve been relying on your spouse for benefits such as health insurance, avoid a lapse in coverage by checking to see what your options are either at your own job or through a public or private marketplace.

Stay calm and reasonable. Avoid emotional reactions that could be used against you, especially those that can be documented, such as through social media or text messages. Beware of extravagant purchases or significant money movements that could be viewed negatively by a judge later on.

Get more help working through a divorce.

Growing your family  

Welcoming a new child into your family is about so much more than money. But having a plan is key.   

Get a grasp on childcare costs and availability in your area. Check whether there's a charge or membership fee to be added to a waitlist.

Have a childcare backup plan. Be prepared if a friend or relative says they'll watch your kid. Shaky economies could send them back into the job market.

Research the cost of essentials your child will need. These would include baby formula, diapers, a safe place for a baby to sleep, a carrier or stroller, and health care. Make sure you can afford and easily access these.

Price out insurance. Find out how much more health insurance will cost with a family plan.

Check your work benefits. Look up your employer’s parental leave policy for when you first welcome your new child. Understand how much flexibility you might have at work for things such as pediatrician’s appointments or child sick days (including what you’re legally entitled to).

Get a plan in place. Consider basic life insurance for yourself and/or a partner to cover your child financially if the worst happens. Plan on setting up a basic will or estate plan, including updating your beneficiaries on important financial accounts.

Read more about how to financially prepare for your new addition.

Changing jobs     

Don’t let fear of the unknown stop you from exploring a new role or career.  

Do the math on total compensation. Compare a new role to your current job. Reminder: Salary is only part of the picture. Weigh other important benefits too, including PTO, insurance, student debt assistance, and so on.

Factor in vesting schedules for a 401(k) match or stock compensation. Check how long it'll take you to qualify at the new place and what you'd miss out on by leaving the old place.

Don’t leave money on the table. Check your current employer’s policy on paying out unused PTO and bonus distribution timing.

Ask about parental leave if you might need it. Does their policy match or beat your current employer’s?

Make sure your new gig is stable. Ask potential employers explicitly about their business’s health—and how well-funded they are if they're a startup. Then do your own research to make sure what HR tells you matches industry news.

Request that severance be baked into your offer letter. This way, if your new employer does layoffs and bases severance payments on tenure, you won’t miss out as a new employee.

Get clear on any starting conditions. Understand probationary performance periods and what's expected of you. Some employers could show you the door after 90 days without any severance.

Check how long it takes to qualify for key benefits. This could include health insurance, paid parental leave, and PTO. You don't want a gap in coverage if you go to a new company.

Ask yourself why you’re making a change. More pay? A new challenge? Expanded or completely different experience? Make sure the new role will fulfill what you’re looking for.

Read more on how to evaluate and negotiate a job offer.

Working for yourself   

Taking the leap to self-employment can be scary anytime. Getting organized is your best defense.   

Research the market. Understanding competitors will help you know how to price your goods or services, or whether you need to pivot because the market is already saturated.

Write a business plan. This can force you to think through all aspects of the business. It can also be useful to show to potential investors.

Figure out funding. Don’t jeopardize your emergency or retirement savings to fund your business. If friends or family are pitching in, define whether the cash is a gift, loan, or investment, and make a contract with everyone’s rights and responsibilities outlined.

Prepare for unpredictable cash flow. Build up a healthy amount of savings and try to pay yourself a salary to help manage essential expenses consistently.

Stay insured. Enroll in a public or private health insurance plan. Also, consider buying disability insurance to cover your income if you get sick or injured.

Plan ahead for taxes. You might have to file quarterly individual estimated tax payments at both the federal and state levels instead of paying a portion out of each paycheck. Set aside a percentage of all your income just for taxes.

Save for retirement on your own. Research other account types for saving without a 401(k).

Check out more tips for navigating the freelance economy and starting a small business.

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