We’d all love to think that a breakup is the beginning of our rom-com, opening the door for new laughs and new love. Unfortunately, the reality of romantic separation, whether that be by break-up, divorce or even death, often leaves us with more financial questions than anything.
So, without expecting the worst in our relationships, how do we prepare ourselves so that we don’t lose our financial footing? Well, it starts with strength in financial independence, both when it comes to liquid cash and emergency funds. Emergencies naturally bring rocky waters to our finances, and those treacherous conditions can be magnified when you’ve lost half of the income you’re counting on.
In general, we recommend an emergency fund that could cover three to six months of your expenses, and that emergency fund should be composed of liquid cash. Having liquid cash is the easiest way to access your money when you need it most, allowing you to simply use it as-is as compared to forcing you into an asset sale or a surrender charge.
With 61% of Americans living paycheck-to-paycheck , building an emergency fund can seem like a daunting task, but luckily, Prime Capital Investment Advisors assists our clients with just that. In fact, we believe that a proper financial plan has an emergency fund in place before we begin looking at long-term goals.
We always advise that you start small, adding little-by-little to a savings account each time you get paid. Unless you need to access that money for an emergency, it will continue to grow, and that growth can be addicting, pushing you to continue contributing. Raises and bonuses can also afford you the ability to increase contributions while continuing to maintain your current lifestyle.
Properly protecting yourself with medical, home, renter’s, car, life and other types of insurance can also keep you afloat when it matters and cover you during a catastrophic split. Without coverage, you could be left footing a bill you’re unable to afford. That bill may be easier to swallow with an effective emergency fund, but the right coverage can protect that emergency fund as well as future contributions.
Additionally, it can be beneficial to take advantage of employer benefits, such as a 401(k) or an HSA. Those types of accounts can help you by offering tax-deferred growth and potential contribution matches, giving you the opportunity to make the most out of the money you’ve worked so hard to earn.
At Prime Capital Investment Advisors, we work with our clients to protect them in the present and take advantage of the future. That includes assistance in starting an emergency fund in addition to creating customized financial plans. We understand that a recent breakup may have you feeling like your world is crumbling, but a lot of freedom comes with independence, especially in your finances. It can be empowering, and when you finally do find that person you’re meant to be with, you can retain your autonomy while also reveling in the perks that come with your partner.
For more information about financial independence as a recently single woman, you can read the entire blog post from Prime Capital Investment Advisors by clicking here.
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