There are certain events in everyone’s life which are of substantial importance and have consequences on finances. Events like getting married, starting a family, or retiring needs financial planning and strategic decision making. These events if planned properly will lead to a smooth life with less obstacles and if planned poorly can push anyone in a never-ending cycle of debt and financial stress. Foreseeing and planning each aspect of these events is the key in sailing through these events and enjoying these phases of life.
Financial Considerations for Marriage:
Combining Finances: It is commonly used phrase marriage is beginning of a new phase in life well it is true at least in the financial sense. Planning for marriage should be done way before the event as marriage brings new financial responsibilities and liabilities as well. For example, after getting married it is a very common scenario that you would be needing a new place to live to accommodate your better half, you would be planning a vacation, some people prefer to get new car or even a buy a new place. In order to tackle these responsibilities planning must be done advance and merging finances can be a great solution for the future expenses like planning a child, getting a dream house or moving to a different state or country. Finances can be merged by merging saving accounts, investments accounts and creating new accounts for common financial goals.
Budgeting for the Wedding: Weddings can definitely leave a mark on your finances if you do not plan them well. It is really important to create a practically achievable budget for the wedding and off course stick to it. Expenses must be prioritized and cost saving should be done where you can save the money. For example, decorations can be optimized, wedding dates can be planned to off season which will give huge cost benefits and negotiations must be done with various vendors like for food, liquor, beverages etc.
Understanding Legal and Tax Implications: Change in marital status can bring changes in taxes, legal rights and even inheritance. You must be aware of the changes that getting married can bring for your income tax allowances, inheritance tax exemptions and pension rights so that you can plan and create an action plan to tackle these changes in advance.
Reviewing Insurance Coverage: Insurances must be reviewed after marriage to include the new beneficiaries and mostly importantly to review the coverage levels for your various insurances like health insurance, life insurance and home insurance. This is the most important decision after marriage as it is regarding the protection of your partner’s health and future.
Financial Considerations for Parenthood:
Budgeting for Childcare Costs: Raising kids comes with personal responsibilities along with financial ones including nursery care, babysitting, healthcare, nutrition and education. Budgeting in advance and finding government schemes for tax free childcare and education will help in child’s future costs like higher education and career expenses.
Saving for Education: Starting early to plan for education of your kids can really help in shaping up your child’s future. You can always start up with saving early using Junior Savings Account (ISA) or can set up a separate savings account as well. Careful planning can take care of future education related expenses like tuition fees, accommodation costs, university fees etc.
Reviewing Life Insurance and Estate Planning: One of the important responsibilities that comes with becoming a parent is making sure that your child and spouse are protected financially even in case of your demise. It sounds like an event which is unlikely to happen to most people but it is really important as failing to cover this event can put the future of your child in risk. Starting early in making extra investments for security of your child and spouse will them a freedom to explore their life and follow their dreams even if you are not there. Estate planning should be done to make sure that your family does not have to work from the scratch to buy a place to live and will spend a substantial part of their lives in dealing with mortgages.
Investing for the Future: Just imagine that your child is secured enough to follow his passions and dreams. Imagine your child does not have to grind endlessly in a job which he does not like to gather funds to start his own business or follow his passion. College educations these days costs a fortune and it becomes really important to start early to plan for your kid’s education. Investment options like child trust funds, junior ISAs, and long-term individual investment accounts will make sure that future of child is secured.
Financial Considerations for Retirement:
Setting Retirement Goals: Setting retirement goals should be a priority for every working professional because time waits for no one and no one can work throughout their life. It is however desired to be active during the later part of your life but that should be work it should be travelling, spending time with your kids and grandkids. To ensure that you enjoy your fifties and sixties you should create a retirement plan for yourself and for that setting clear retirement goals is very important. Your retirement goals should be clearly defined like the retirement age, lifestyle preference, and financial needs for retirement. Your goals should consider how much amount you will need to maintain your desired standard of living.
Contributing to Retirement Accounts: Once you have established your goals for retirement the very next step should be to quantify how much you should be contributing to retirement accounts like workplace pension plan, personal pension plan and self-invested personal pension plan. Maximizing the contribution according to growth potential is the key to get most out of your contributions.
Diversifying Investments: While investing for the retirement diversifying your investment must be done in order to safeguard your investments to minimize risk and reduce the volatility of your assets. You can diversify your retirement investments easily by distributing the invested amount in various asset classes like stocks, bonds, real estate to mitigate the risk of loss of investment in any one asset class.
Planning for Healthcare Costs: As we age our healthcare expenses increase due to need of constants health check-ups, treatment of any chronic conditions and any emergency medical needs. If anyone is planning for retirement must take these factors into consideration as these expenses can impact the savings for retirement. Hence it is very important to consider private health insurance, long-term care insurances and funding for emergencies while planning for retirement.
Every stage of life comes with challenges which can be personal, financial, medical etc. wise people are always ready because they plan in advance for any circumstance may it be expected or unexpected. If you have planned in advance for each stage of your life you would be focusing on other important aspects and will not just go through life but you will grow through life.
