Retirement Planning Differs For Unmarried Couples

You have devoted your life to working hard, providing for the loved ones around you, and saving for your retirement years.  Now as you approach your golden years, you have raised your family, you have built an estate that you are proud of, and you are deeply committed to your relationship with your significant other.  You both are a happily unmarried couple, and you know that you want to spend the rest of your life with this person. With this said, is your retirement plan specifically tailored to your unmarried relationship with this individual?

Unmarried couples must realize that their retirement planning is a completely different animal compared that of married couples.  As an unmarried couple, don’t let your retirement years discriminate against your wishes for you and your significant other.  It’s important to plan  your retirement together now with a financial advisor/ financial planner to uphold your security in the long run.  Therefore, if you are in an unmarried long-term relationship, please consider the following elements when planning for these golden years with your partner:

Living Arrangements

When an unmarried couple initially moves in together, one of the partners may sell or rent his/her home.   That partner might move into the other partner’s residence, or the couple might decide to buy an entirely new house together.  Whatever the scenario might be, the couple might distribute living expenses depending on which partner qualifies for tax deductions.

 

Furthermore, if the couple did indeed buy a new home together, an expert might suggest that the couple purchases life insurance policies on each other to help pay off the mortgage in the unfortunate event that the other partner suddenly dies.  Considerations must also be made about whose name will be on the bills and the how expenses will be shared.  Also, additional considerations must be made regarding estate documents.   For example, if a partner dies, will the surviving partner continue to live in that home until his/her own death, or will the deceased partner’s family members immediately inherit the home?

 

Joint and Individual Accounts

Many unmarried couples prefer to keep both individual accounts and a joint account.  In regards to individual accounts, the couple can separate the assets/debts that each partner individually accumulated and incurred before “couplehood”.  Many couples also open up a joint account primarily funded by both partner’s monthly social security benefits.  This joint account can then be used to pay for expenses together, such as housing expenses, restaurants, vacations, etc.

 

IRA, Pension, and Retirement Assets

Unfortunately, the spousal advantages of retirement accounts and benefits can be nonexistent for an unmarried couple.  These spousal advantages include advantages, such as the spousal rollover IRA option and the spousal pension continuation benefit election.   An unmarried couple must also annually review beneficiary designations (such as IRAs, annuities, and life insurance) in order to uphold each partner’s exact wishes.  Because of the contractual nature, beneficiary designations will always supersede heirs in other estate documents.

 

Separate Tax Returns

Complex consideration must be taken when an unmarried couple files separate tax returns.  The couple has to determine which partner gets to deduct which expense.  Because each partner’s individual contributions can vary, deductions vary as well.  Thus, it’s best for an unmarried couple to seek the services of an accountant especially for tax returns.

 

Estate Planning

As an unmarried couple planning for your enjoyable retirement together, no partner wants to contemplate the possibility of an unexpected sickness, an accident, and even death; however, both partners must be strong and plan for the unexpected as well as the very end.   For this reason, a will, power of attorney, living will, and healthcare directive is essential to have. For instance, an unmarried couple must carefully consider who will make final medical decisions if one partner in the relationship is unexpectedly gravely ill and on life support. Will the other partner or the children of the sick partner ultimately determine when to “pull the plug”?

 

As for estates, many unmarried couples choose to keep estates separate.  Especially in these cases, financial advisors/ financial planners are needed to set up trust agreements, wills, and other estate documents.

The End Game

Compared to married couples, unmarried couples have a multitude of additional considerations to make when planning for their retirement together.  The complexity of an unmarried couple’s retirement plan increases especially with the presence of ex-spouses, children, grandchildren, separate estates, etc.  You and your significant other must navigate through this retirement planning process with the help of a trusted financial advisor/financial planner.  Especially if you are an unmarried couple over the age of 60, you must request the financial, legal, and tax advice of experts in order to protect  your happy retirement, your estate, and your wishes as a couple.  So, don’t navigate these waters alone; seek the help of an expert today.

 

Merkel, Steve. “Relationships And Retirement Planning.” Investors Business Daily. 2 November 2012. <http://news.investors.com/investing-personal-finance/110212-631985-relationships-and-retirement-planning.htm>

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Maximize Your Social Security Benefits

You have worked hard all of your life.  You have raised a beautiful family that you are proud of, and you and your spouse are finally ready to enjoy your golden years together.  And yes, you have also planned and saved for these future retirement years.   Maybe you planned many years ago or maybe you planned just recently; but either way, you probably factored in the boost offered from your future Social Security benefits.  Whatever the boost might be, wouldn’t you rather maximize those benefits if possible?  If the answer is a resounding “YES”, then you want to learn about the various claiming strategies, and fully discuss them with your financial adviser/financial planner.  The proper strategy can amplify your lifetime Social Security benefits significantly.

An example of one strategy is waiting as long as possible to start claiming your Social Security benefits.  The earliest age that a retiree can start claiming these benefits is 62 years old.  However, did you know that once you reach your full retirement age (between 65 -67), your social security benefits increase by 8% each year plus inflation adjustments? Wow, the money claimed increase considerably just by waiting a little longer.

Are there claiming strategies that can optimize your Social Security benefits even if you need to start collecting at an earlier age?  The answer is “Yes”.  Advantageous strategies can be applied to this situation as well when you know how to maneuver through the claiming process… you just need the proper expertise to guide you through the rules.  Once you know these rules and know how to navigate confidently through the claiming process, you can apply a strategy that works in your favor, and maximizes this money.

Some of these claiming strategies involve the idea of spousal benefits.  Here, spousal benefits can be applied to a “Restricted Spousal” strategy as well as a “File and Suspend” strategy.  According to Jim Blankenship, CFP, EA of Forbes Advisor Network, “File and Suspend allows for the lower wage earner to increase his or her benefits by adding the Spousal Benefit, while the higher wage earner continues to delay his or her benefit, adding the delay credits.” On the other hand, the Restricted Application for Spousal Benefits “provides one spouse or the other with the option of collecting a Spousal Benefit, while at the same time delaying his or her own retirement benefit.” All and all, any couple must carefully consider the particular rules pertaining to these strategies in order to determine the appropriate strategy that applies to their specific situation.

Overall, these claiming strategies can cushion your retirement years with thousands of dollars.  If you are thinking about navigating through your Social Security claiming process alone, it might be very unrealistic because the rules behind these strategies can be complex and meticulous.   Even the employees at the national and local Social Security offices cannot give any advice; therefore, it’s best to seek the help of a financial advisor who has an in-depth knowledge of the best Social Security strategies for retirees.  The world today is very different… life expectancy has increased, pensions have dwindled, medical costs have increased, and the economy remains uncertain.  Especially now, maximizing your Social Security benefits is necessary because these are unfavorable conditions.  So, make certain that you fully learn and understand the rules of each strategy before you chose.  You can add thousands of dollars to your retirement funds just by applying the right Social Security claiming strategy for you.

Investment Advisory services provided by Gregory Ricks & Associates

Blankenship, Jim. “Are You Leaving Social Security Money on the Table.” Forbes. 26 November 2012. <http://www.forbes.com/sites/advisor/2012/11/26/are-you-leaving-social-security-money-on-the-table-you-might-be-if-you-dont-understand-and-use-this-one-rule/>

Roberts, Damon. “The Retirement Planning Edge: Maximizing Social Security.” Fox Business. 27 November 2012. <http://www.foxbusiness.com/industries/2012/11/27/retirement-planning-edge-maximizing-social-security/>

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3 Tips for Singles Saving for Retirement

I’ve read too many articles to count that talk about retirement and only focus on couples rather than a single retiree; this ignores the increase in single retirees over the past ten years.  According to the Census Bureau, about 35% of 50- to 54-year-olds were single in 2010, up from almost 29% in 2000.  Among 55- to 64-year-olds, 33% were single in 2010, versus 30% in 2000.  Whether these statistics are due to increases in divorce rates or the proportion of the population that never married, it’s extremely important that these individuals take extra precautions to ensure a secure retirement.

Most couples have two incomes and shared economies of expenses, but the responsibility of saving falls squarely on single savers themselves.  The cost of living for single retirees is about 40% to 50% higher than for empty-nest couples, which is why it’s recommend that singles save at least 15% of their pay for retirement.  The most important elements that singles should take into account while preparing for retirement is safeguarding their nest egg from creditors, as well as the prospects of unemployment or disability.  Let’s look at these elements in greater detail.

1. Safeguard your nest egg.  Finding any job in this economy can be tough, let alone a job with decent benefits or one that comes with an increasingly elusive traditional pension. But when you have a choice, opting for a position with good benefits can give you more financial security. If you can’t find a job with a pension, shoot for one that has a 401k with a match. Over time, good savers can actually accumulate a bigger retirement benefit with a 401k than they could with most traditional pensions.  Single savers can seek out financial planners that can provide second opinions for ideas on safeguarding retirement funds.
2. Prepare for unemployment.  To prepare for a potential job loss pay off as much debt as possible and start setting cash aside – enough to finance living expenses for the amount of time it will take to acquire another job in your industry.
3. Prepare for disability costs.  In the event of an illness or injury, disability insurance replaces a set percentage of your income – typically, 50% or 60% – often up to a maximum period of time.  But for single adults, replacing their income with 60% of what it regularly was, as well as taking on income tax deductions will not cover what it takes to live.  To protect against this kind of shortfall supplementary coverage is an alternative to consider.  Even better? Single savers leaving their job can take the coverage with them.

On top of these important elements to take into account for single savers, it’s also important to think about long-term care planning and supplementary insurance plans, as well as speaking with an attorney to manage their financial affairs if they are unable to do so.  Single savers have to take on a lot more responsibility than couples, so it’s crucial that singles understand the elements that they are up against.

Gregory Ricks & Associates is a registered investment adviser. Gregory Ricks is a registered insurance agent.

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Simple Strategies for Beefing up Your Savings

If you’re like most Americans, no matter how old you may be, you’ve had the importance of saving money beat into your head ever since childhood. Even now, as an adult, you can almost hear your parents voicing didactic phrases like, “A penny saved is a penny earned,”  “Money doesn’t grow on trees,” or “A fool and his money are easily parted.” As a kid, these platitudes were more annoying than helpful, but grownups recognize how very right their parents were to emphasize the vital importance of learning how to save.

Of course, understanding the importance of saving your money and actually developing and following a savings plan are two entirely separate issues. For most Americans, savings doesn’t come as naturally as we might hope, but there are countless ways to start socking away some cash today. So figure out what you’re saving for and how much you’d like to set aside, and leave that procrastination behind you — you have no more excuses!

Separate Your Savings Goals
Instead of socking away everything into one savings account, set up a separate account for each of your savings goals. You’ll want these funds to be FDIC-insured, so you may need to open a few extra savings accounts at your bank: one for your emergency fund, one for your new-car fund, one for your vacation fund, etc. Any money you intend to save toward retirement, however, should be invested in a different, tax-advantaged accounts, as the yields with traditional savings-only vehicles are too low for a retirement fund.

Set Your Savings on Auto-Pilot
For an utterly hassle-free way to bolster your savings, arrange for your bank to automatically divert a predetermined dollar amount from each of your  paychecks into a savings account (or a few savings accounts). You’ll be surprised how quickly funds add up, and since it’s an automated process you needn’t lift a finger. For example, if you get paid twice a month and you have your bank automatically deposit $100 from each paycheck into your savings, in a year’s time you’ll have saved $2,400 — and that’s before accounting for any interest you may have accrued.

Give Yourself an Allowance
Instead of pulling out that well-worn debit card whenever you get the urge, withdraw a small amount of cash to pay for your weekly incidentals. These will vary from person to person and even from week to week, but might include things like a morning coffee, lunches or dinners out, treats and impulse buys. Stick to your guns — once your “allowance” is gone, it’s gone until next week. If you can see the financial impact of these purchases, you’re less likely to spend your hard-earned money.

Reassess Your Home and Auto Insurances
Taking the time to shop around for better rates on your homeowners and auto insurance sounds tedious, but spending even as much as just half an hour comparing rates each year could save you hundreds of dollars, so it’s certainly time well spent. The reason you should make this an annual task is simple:Auto and home insurers readjust their pricing annually based on their claims history. You should also explore the possibility  of using the same carrier to insure both your home and your vehicle, as most insurers offer a discount (which can be as much as 15 percent) for doing so, points out the NAIC.

Round Up
Every time you make a purchase with your checkbook or debit card, when you make a record of the transaction, always round up to the next dollar. For example, if you spent $11.39, you’d round up to $12; if you spent $3.04, you’d round up to $4. At the end of the month, total up the difference (or in this case, discrepancy), and add it to your savings account. All those pennies really do add up, so it’s a strategy worth trying.

Reward Thyself
Reaching one of your savings goals, no matter how large or small, is always an accomplishment, and one worth celebrating, at that. When you first sit down to develop your goal, decide how you plan to reward yourself for reaching it. Try to make the value of the reward commensurate with the amount of time and money you’ve saved: Did you finally pay off that department store credit card? Go ahead and buy those shoes or the nine-ion you’ve been eying — just be sure to use the cash you’ve saved to make the purchase, not a credit card.  Don’t go overboard, or you’ll simply defeat your savings efforts.

The time to start saving is now, so try implementing some of the strategies listed above. The money you save by the end of the year will be well worth any short-term anxieties implementing a savings plan may produce.

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This Year Resolve to be Realistic in Your Financial Resolutions

Anyone who goes to the gym knows the pain of searching for a spot in the parking lot at the beginning of January.  Yoga classes that are empty the week before Christmas are crammed to capacity as soon as New Year’s Day dawns, and machines that gather dust all summer feature lines three people deep.  Then, around the middle of February, the new faces begin to fade.  Classes that were temporarily packed regain their elbow-room, and the more esoteric machines in the circuit fade back into obscurity.

There is a similar cycle in financial planning.  Between the charging of the Christmas gifts at 18% and the arrival of the bill, many investors resolve to get their financial life under control.  The number crunchers at statisticbrain.com tell us that 45% of Americans usually make New Year’s resolutions.  Of that group of regular resolvers, 35% of the resolutions are about finances.

Just like getting in shape, the shine of planning for retirement often fades a month or so in, and many investors are back to their same old free-spending ways by spring.  In fact, of the people making New Years Resolutions, only about 8% find success.  Often the reason that body shapers, and retirement savers, fail in their efforts is that they set the wrong goals.

Just as a 300lb person shouldn’t resolve to weigh 120lbs in three months, someone barely scraping the rent together can’t reasonably expect a balance of $100,000 in the bank by the next time the big ball drops.  To assist you in resolving responsibly, let’s adapt 6 guidelines for creating effective weight-loss goals (found on Discovery Fit and Health.com) to preparing for retirement.

Good goals are:

Short Term and Specific – Setting a goal to retire at 55 may make sense when you’re 50, or even 45, but at 25 you just don’t have enough information to know if it will be possible.  Set short-term goals that are reachable in a few years, and then scale them up as the wealth building process works for you.

Trackable – Make sure that the goals you set have aspects that are quantifiable, and use your portfolio and the meetings with your financial planner to make sure you are on the right track to reach them.

Positive – Despite what you pessimists may think, the human brain works better in a positive direction.  Resolving not to be broke in 5 years is much less powerful than a resolution to commit 15% of your after tax income to retirement savings.

Personal – Think about why you want what you want and write that into your goals.  A resolution to max out your child’s college savings plan so that they can enjoy the advantage of an education without incurring crushing debt, is personal.  Resolving to have more in your retirement account that your best friend, is not.

Rewarding – Take time out to celebrate the small victories.  Treating yourself to a steak dinner when you max out your IRA, or a weekend away when your child’s college plan is fully funded, can be powerful motivators to keep on saving.

Realistic – Goals are a funny thing, if you use them correctly they can be rungs on the ladder to your dreams, but used incorrectly they can serve as pointing fingers, criticizing you when you fail, and discouraging further efforts.

 

Just as it’s important to work with a doctor and a personal trainer when customizing fitness goals, it’s important to speak with a financial planner when setting up retirement plans.  They can make sure that the goals you set follow the guidelines above, and can also help you modify them in the case of unforeseen financial situations.

Hopefully, these tips can turn you into one of the people whose resolutions turn into habits, and whose goals turn into stepping-stones on the path to a happy retirement.

 

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The Cost of a Healthy Retirement

Ever since the 2008 presidential elections, America has been in whirlwind discussions over our healthcare system.  Any American that has paid attention has had healthcare in the forefront of their mind at some point over the past four years. But it’s becoming an increasingly important issue for a specific group of Americans: The retirees.  The estimated retirement healthcare costs are continuing the rising trend from the past decade. The latest estimate from Fidelity Investments puts this year’s figure at $240,000.  That figure, up 4% from last year, means that on average, a 65-year-old couple retiring in 2012 can expect to pay $240,000 for their healthcare costs over the remainder of their lifetimes. This figure is based on the average life expectancy of men living to 82 and women living to 85. To add insult to injury, that figure doesn’t include the cost of long-term-care, dental care, and any over the counter medication.

 

The figure cited for the 2011 cost expectancy broke a long term trend of rising costs as Fidelity cited effects from Obama’s plan for healthcare that would reduce many of the senior citizens out of pocket expenses as the reason for their estimation decrease.  That figure was $230,000, a $20,000 drop from 2010.  That break in costs has been overwhelmed by overall healthcare trends causing this year’s increase, which is a cause of concern for more and more people nearing retirement.

 

So the question is, what can we do about it?  Of course, a shorter lifetime would mean lower costs, but that’s not high on anyone’s investment goals.  Luckily there are a few ways to help manage what seems like a pretty intimidating number sitting in your future.  Here are a few suggestions..

 

• Know it. Expect it. Plan for it.  It’s the most simple, but one of the hard to accept options.  Healthcare expenses in America are unpredictable on both an individual and societal level.  Legislation may or may not affect your future costs.  The figure for this year was based on current legislation, which we all know may, or may not remain in place.  If you are planning your retirement you might not take into account certain expenses (either consciously or subconsciously) such as hearing aids, dental work, the possibility of retirement homes and assisted living facilities.  45% of the total expenses estimated by Fidelity are out-of-pocket expenses.   Make sure when you are planning your investments and target figure for retirement you take these things into account.  Healthcare is something you don’t  want to have to skimp on later because you failed to address it now.

 

• Understand Medicare- what it is and what it could be. If you are looking to retire now, or in the near future, the status of Medicare is somewhat up in air.  With each change in legislation, it’s important to know what it will cost you, what will be covered, and how to adjust your budget accordingly.  The costs associated with Medicare go beyond the copays, and it’s critical to understand which programs cover what.  Medicare Part A is the general program covering hospital services that most people are familiar with, which doesn’t carry a premium for most beneficiaries.  For almost $2,500 a year, a couple can spring for part B which covers many of the doctors and other services that A misses.  For an additional expense, you can buy Part D which covers prescription drugs.  32% of the total estimated cost of health care for retirees lies in the premiums for Medicare part B and D.  Then, to cover all things not covered by the various Medicare policies, for another $4,000 a year a couple can purchase a Medigap policy, cleverly named as it fills the gap in coverage of the previously purchased programs.  Take the time to figure out what programs you need and what those programs will cost you.  A little math now will save you a lot of time, energy, and money later.

• Take care of yourself and your body. This might be the most obvious, but commonly overlooked piece of advice.  The fewer health problems you have in the future the less your healthcare will cost you.  Prescription drugs costs account for 23% of the total estimated figure for healthcare for retirees.  The need for many of those drugs can be reduced, if not completely avoided, by living a healthy lifestyle, starting today.  Schedule your checkups.  Eat healthy.  Get some exercise.  These are things that we have been told our entire lives, but now you have dollar signs as your motivation to do so.

The cost of healthcare for retirees is high, but that cost for not planning for it is even higher.  Do your homework, keep up with the changes, and add them into your budget.  Healthcare costs as a senior citizen doesn’t have to be a morbid subject, unless you forget about it.

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5 Life Insurance Myths to Disabuse Yourself of Now

Life insurance may not sound all that exciting, but when you do stop to think about life insurance and you, it’s not uncommon to assume that since the concept of life insurance is simple enough, so too are the products. It’s also fairly easy to rationalize the things you really don’t understand about life insurance, and before you know it, you’re harboring potentially damaging life insurance myths.

In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

The coverage you get at work is enough.

While this may, in fact, be the case if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes, for most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially, it must also pay off any debts, such as the mortgage or even the MasterCard, as well as settle up with Uncle Sam.

Only the working spouse needs life insurance.

This is a curious — and wildly inaccurate — belief, yet it somehow persists. Life insurance on the breadwinner is intended to fill in the gap left by the loss of a paycheck, but that discounts all the valuable work a stay-at-home partner contributes to the relationship. If you’re used to this arrangement, how would you pay for child care or the cleaning, or even manage the household without a little financial help in the event of such a loss? It can be easy to overlook the many contributions of the non-breadwinner, but to do so would be remiss.

The value of your life insurance coverage should equal two years’ salary.

Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If your lifestyle is more modest and you’re not financially responsible for anyone, on the other hand, then two years’ salary may even be excessive.

Single people without dependents don’t need to own life insurance.

While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents. And as one MSNBC article on the topic suggests, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

You don’t need professional services to buy life insurance.

While this is, in fact true, as any consumer can go online and shop for, and even buy, term and permanent life policies, electing to go it on your own can be detrimental to your financial future. A professional life insurance agent advisor can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of myriad different policies, if you’re honest about your financial and life circumstances, a professional can not only help you determine how much coverage you need, but also help decide whether a term or permanent policy is right for you. They can even customize a plan to meet your unique needs.

Life insurance is an important product for most everybody to consider, but it helps if you have your facts straight. So whatever else you think you know about life insurance, you might consider running it past an agent or advisor.

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Roth vs. Traditional 401ks

By now, most Americans understand that at the very least, they should be participating in their employer’s defined contribution plan, most commonly offered in the form of a 401(k). But some companies offer two forms of these plans: the traditional 401(k) and the Roth 401(k). You thought deciding how much to allocate to your plan and then researching and electing the investment funds to support it was confusing enough, but here you are, faced with yet another option for safeguarding some retirement funds. Let’s break it down just a bit more.

What’s the difference?
The primary difference between a traditional and a Roth 401(k) is simple but significant. With a traditional 401(k) plan, your contributions grow tax free, and you pay taxes on the withdrawals; Roth 401(k)s, on the other hand, work in precisely the opposite way, as you pay taxes on your contributions but not on your withdrawals.

Additionally, Roth 401(k)s tend to be seen as more of an estate planning tool, since they do not necessitate that you to take required minimum withdrawals (RMDs) once you reach age 70 ½, as you must do with traditional 401(k)s. This allows you to leave your funds untouched for as long as you want after retirement, letting your investment grow tax free all the while.

Which is right for you?
This is a conversation best held with your financial advisor, as you must determine whether the back-end payoff of a Roth 401(k) outweighs the benefits of traditional tax deferral on the front end, but generally speaking, it depends largely on where you are in life and into which tax bracket you fall.

If you’re relatively young with an eye toward saving for retirement and you don’t earn a great deal of money, a Roth 401(k) may be worth exploring, as the upfront tax-savings benefits wouldn’t be as significant to you as a tax-free payout in retirement. Conversely, if you’re an established earner in a higher tax bracket, getting up-front tax-advantaged treatment is probably best, making the traditional 401(k) your most likely option. This is especially true for individuals who expect to be in a significantly lower tax bracket when they retire.

You can even double-dip.
If your employer does offer both types of 401(k) plan, you can split your contributions between the two if you so choose, as long as your combined annual contributions do not exceed 2012’s annual limit of $17,000. If you’re 50 or older, that limit jumps to $22,500.

With so many options, there is a 401(k) plan, or a combination of the two, that is ideal for your current situation. But before you make your decisions, be sure to weigh these considerations carefully, especially if you don’t speak with a financial advisor regularly.

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First Home Buying: Saving Your Checkbook

Everyone plans for the purchase of their first home.  It’s a monumental step for most people, signifying the stability and maturity of adulthood.  For many it may be the first major investment of their lives, which can lend itself to both excitement and stress.  The danger of the move has been illustrated by millions who have suffered in the housing crisis.  Handing away a large chunk of your savings is terrifying, but the financial strain doesn’t end after you sign the papers. In many cases, the purchase of the house means the strain is just beginning, with the house payments, the interior purchases as well as any renovations or cosmetic changes you hope to make.  It may seem like your money is whisked away on a hundred small purchases that you don’t even notice making: light bulbs, garden hose, garbage cans, window cleaner… the list goes on and on.

The costs of buying your first home are often time inevitable.  Much of your success will depend on your planning and financial stability prior to the purchase, but there are a few things you can do after you make your move that can save you some of that valuable money.

• Save on the Small Stuff-  Like mentioned before, you will find yourself making purchases on things that you had never thought to plan for.  Lamps, chairs, wall décor, lawn rakes and so on.  Before you jump in the car to run to the closest hardware stores or furniture outlets, think about some of your lower cost options.  A lot of these things can be found at thrift stores, rummage sales or even your parents’ basements or attics.  In the first few years of your new home it’s more important that you can afford the critical things, which can mean saving money on the more frivolous things.  That 1865 French armoire might look nice in the guest room, but you might wish you had that money later when you can’t afford to fix the leaky plumbing that puts your bathroom out of commission.  Prioritize early, and save money on purchases on which you can afford to do so.
• Become Cozy With Your Repair Guys- Often times, if you purchase a new home or have a note included in your purchase papers, many of the repairs needed for a limited time (normally up to a year) will be covered under a warranty of sorts by the seller.  This can save you a lot of money and can give you the confidence that the seller isn’t keeping any metaphoric skeletons in the closets of the home.  The downside is that the items that you bring into the home or any damage that you cause yourself are not covered.  The easy tip is to try to avoid needing things repaired, but many of these things are inevitable.  As you have people into your home to fix the various things that have broken, or that you broke, keep track of the work that they do.  It’s important that you create a rapport with these workers and determine who you like and who wasn’t worth the money.  Sorting though your options and having them in your back pocket can provide valuable contingency planning in the case of emergency later.  Also, this working relationship and repeat business could lead to discounts or even valuable knowledge that allow you to fix the problem yourself later.
• Shop Around for Appliances-  Even houses that come with all the bells and whistles, (dishwashers, refrigerator, washer and dryer) will likely lack at least one of the essentials.  Don’t wait until you’ve moved in to begin your hunt.  This will leave you rushed and might lead to an impulse purchase.  The weeks after you close on the home but before you move in offers a great time to allow you to shop around for these types of purchases.  The first tip in this shopping trip is similar to the tip on purchases the small essentials, go cheap.  But the difference with this is that you need to go cheap but find the value.  You don’t want to buy the lowest end fridge on the market, or you might find yourself unhappy with its functionality.  Weigh your options.  Is the energy efficient air conditioner worth the extra expense?  Do you need to splurge on the gas stove because you love to cook?  Take the time to think about these things before you dive in.
• Be a Good Neighbor-  This is probably the easiest tip out of the bunch, but it’s critical that you make friends with your new neighbors.  They can be a valuable asset, not just if you need a cup of sugar, but if you need someone to let your dog out or need a ride to pick up your car from the repair shop.  You don’t have to be BFF’s with everyone on the block, but having a few good friends around you could make your new home more enjoyable and more convenient.

Buying your first home will cost you money.  It’s a large investment and a large responsibility, which is what makes it such an exciting milestone in the lives of many people.  Making a few simple changes in your post purchase actions and decisions can make the entire process less stressful and can make the transition from first house to first home easier.

Photo Courtesy of: quizzle.com

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