“`html

When to Reevaluate Your Savings Strategy

It’s always wise to save money for emergencies and future goals. However, your financial journey won’t always be straightforward. Major life events can cause your savings to accelerate, decelerate, or be reprioritized.

You’ve Had a Major Life Change

Significant changes like marriage, divorce, having a baby, or caring for an aging parent may necessitate a shift in your savings plan. Here’s how to update your strategy:

• Set up a 529 plan: When you have a baby, start thinking about their college education. A 529 plan is an investment account specifically for educational expenses. You can even set one up before your child is born. There are two types: prepaid tuition plans for specific schools and education savings plans for any college or graduate school. Ensure you’re saving for your own retirement before prioritizing college savings.
• Strengthen individual savings before a divorce: During and after a divorce, your financial stability is crucial. Save in a high-yield savings account leading up to the divorce to maintain financial flexibility.
• Build a home improvement fund: If an elderly parent or another family member is moving in, save specifically for a home remodel or new furnishings. A high-yield savings account is a good choice, or consider a home equity loan or HELOC if you have good credit and favorable interest rates.

You’re Approaching Retirement

As retirement nears, you might be earning more than earlier in your career, giving you more flexibility to prioritize saving. Here are some options:

• Contribute the maximum to your 401(k): If you’re not hitting the $22,500 maximum yearly individual contribution, increase your monthly savings. Utilize a workplace match if available.
• Contribute the maximum to an IRA: Save up to $6,500 per year in an IRA. Consider saving in an IRA once your 401(k) is maxed out. A Roth IRA can offer different tax benefits.
• Take advantage of catch-up allowances: Savers 50 and older can save more per year in 401(k)s and IRAs. In 2023, you can save an extra $7,500 per year in a 401(k) and an extra $1,000 per year in an IRA starting at age 50.

You’re Considering a Career Change

Making a career shift, especially if it involves going back to school, requires planning. To save for school, basic expenses, and future goals, try these strategies:

• Set up a 529 account for yourself: A 529 plan isn’t just for kids; you can open one for your own education expenses. Choose investments appropriate for your timeline.
• Make use of certificates of deposit (CDs): Save money in CDs, which offer higher interest rates than traditional savings accounts. Use a CD ladder to save in CDs with different maturity dates.
• Limit 401(k) and IRA contributions: During your career pivot, consider contributing only the amount your employer will match or a reduced amount if you only have an IRA. Save the rest in a high-yield savings account for easier access.

You’re Considering Buying a House

Before buying a house, many focus on saving up a down payment. Depending on the loan type, credit score, and market competitiveness, a down payment may need to be as much as 20% of the home’s purchase price. Here are some options:

• Cut expenses to find more savings: Increase your savings by cutting subscription services, dialing back your cellphone plan, selling unused items, or renting out your car.
• Save in a CD: If you plan to buy a house in three years, save in a three-year CD to capture a higher interest rate. Keep some savings accessible in case you buy sooner or face an emergency expense.
• Use savings for pre-sale repairs or renovations: If you’re already a homeowner, certain improvements can increase your home’s sales price. Consider a kitchen renovation or finishing a basement.

Saving for Life’s Big Milestones

Reallocating savings and learning about different options can be time-consuming, but it usually means something significant is happening in your life. Recognize the shift in savings as a positive move toward the future you want.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

“`