Looks like another (and most likely final) fed interest rate hike is expected this week. Curbing inflation never seemed so expensive, am I right?
Because your dollar just doesn’t seem to go as far as it used to, being more focused on tracking your money is more important than ever.
Life is expensive. And when big life moments come around (like marriage and babies and college), the price tag seems bigger because the budget is already stretched. There’s no “winging it” when tuition bills start coming due. You need a plan.
Like this guy:
(Hear the music in your head reading that GIF?)
I mention this because the words are fitting for what I want to talk about today (in a not-evil-plan way).
You need to be prepared for how those big life shifts change your situation both financially and in the day-to-day.
So, today I want to invoke that phrase to talk about making room in your budget to prepare for the shifts of big life moments (weddings, having kids, sending those kids off to college).
Pronto Income Tax Team on Insurance Planning for Life’s Big Changes
“A man who dies without adequate life insurance should have to come back and see the mess he created.” – Will Rogers
When you’re buying a wedding dress, decorating a baby nursery, or dropping your firstborn off at college, insurance probably isn’t on your mind much. Nor should it be: Those moments don’t come every day, and you should take every second to relish them.
But those moments will be even more special if you’ve planned ahead for how your insurance premiums might change. Because the expenses for life’s magical moments can be so big, they are worth taking a second to think about — as far ahead into the future as possible.
When wedding bells ring
Health insurance: One immediate benefit of getting hitched is access to the “family” class of health insurance. It doesn’t give you much of a price break on health insurance per covered person, though (at least until you have kids). The Obamacare marketplace is an example of this. But what marriage can do for you is open up one of your Los Angeles employers’ subsidized health policies for a spouse.
Some important questions to ask regarding spousal employer-provided coverage:
- Run the math on premiums, co-payments, co-insurance, and deductibles. If you both have employer coverage, whose plan would be better?
- Is there a “spousal surcharge” added to your premium if he or she is eligible for coverage from their own employer?
- Are all doctors for both of you on both plans?
- Are either of you young enough to stay on your parents’ plan?
Getting married is also considered a life event that qualifies you for a special enrollment period for insurance. You only have 60 days to act on that, so it’s a little more time sensitive.
Auto: Driving history, vehicle, and credit score weigh in here, but one of you might be able to save almost a hundred bucks a year by combining auto policies with a new spouse. (That of course depends on their driving history, as well as yours.) Couples younger than 30 tend to get bigger breaks than those who are older than 30.
Homeowners: The trick here is to bundle coverages and, depending on the carrier, your premiums might get a single-digit percentage haircut — but you may not save much if you expect to cover all your new spouse’s belongings.
As the family grows
Health: As we said, family policies tend to save money per person. And the more kids you have in the “family,” the more you save.
Still, insurance marketplace plans run from 1,000 to 2,000 dollars a month — an expense you should definitely plan for.
(These figures vary a lot based on many factors… like everybody’s general health, where you live, and how much you make.)
Life insurance: A lot of people recommend getting life insurance when you have kids as part of protecting the future of the family that you now have.
Depending again on several factors (such as your health), you can often get a quarter-million in coverage for less than 40 dollars a month. You can also take out life insurance for your children, which some parents use as a kind of savings plan for their little ones’ adulthood. This costs even less per month, generally.
Flying the nest
Health: Many colleges and universities require students to have health coverage. A policy catered to a college student runs about three grand an academic year. Many schools let your new academic opt-out if you already have family coverage, but make sure your plan has coverage (and doctors) in your network near the school. Also, you won’t save anything by removing the college student from your family plan if you have other kids.
(FYI, the new “No Surprises Act” is curtailing emergency rooms billing for care costs higher than what insurance covers.)
Auto: College students tend to get lower rates than their contemporaries who aren’t attending college. If your kid gets good grades, be sure to mention that to the insurer. You can also ask about discounts on your own auto policy (if your student is on it) since they won’t be driving your car for a while — or maybe even driving at all.
If your kid is going to be driving at school and remains on your policy, let your insurer know the location or a future claim might get denied. And as always, when you speak to auto insurers, ask about any discounts or deals — most carriers have many that they don’t talk about much.
Renter’s: Your kids’ stuff is covered by your homeowners policy if they live in campus housing. If not, look into renter’s insurance. It’s often less than 20 bucks a month and covers thousands of dollars worth of belongings.
Of course, these are just a few of the major life changes you will likely experience at some point (if you haven’t already). Because big moments greatly affect finances (as well as every other aspect of daily life), their influence on your insurance is pretty significant.
One thing I love about the work we do is getting to see Los Angeles clients walk through every phase of life. Being involved in some capacity with your financial journey means we get a little sneak peek into those big, special moments — and not only get to celebrate with you but get to help you plan in advance so you can relax and enjoy the moment to the full.
In your corner,
Pronto Income Tax Team