The most significant moments in our lives also tend to have a direct impact on our finances. That doesn’t mean people should avoid these moments – the opposite, but it does mean that some planning should come into play.
Creating a financial plan for these moments and all of the changes they bring can help to guarantee stability. It’ll help alleviate the burden of financial stress that may otherwise be lingering in the air.
Going to College
More significant than getting your first car or signing up for your first credit card is the thought of heading to college. Not only will it have a significant impact on your future career – but it brings with it a certain level of financial burden.
There are countless guides out there to help students and parents alike prepare for this moment. Some of the primary options include a 549 Plan (*reference footnote), Coverdell Education Savings Account, UGMA/UTMA Custodial Account, and General Investment. Plus, the traditional route of taking on loans should be thoroughly researched when the time comes.
Getting married brings with it two significant financial changes. The first is the wedding itself. Weddings are typically more expensive affairs, though it is up to the couple to decide how much they want to spend on the celebration. It is important to budget to avoid starting the marriage with debt.
Then there’s the fact that marriage combines two finances into one. This requires a lot of adjustment, naturally. Couples preparing for a wedding should start the conversation early – learn to be honest about finances. If there is any debt in the air, discuss it and come up with a plan together. Now is also the time to start working on credit as a team. It’s also wise to create a savings account for the future.
Buying a Home
The process of buying a home can be intimidating and complex. Much research goes into the process, not to mention the financial side of things. Searching homeowners must take the time to understand their budget – that is to say, what sort of house they can afford.
Likewise, several different types of mortgages (fixed-rate, adjustable-rate, interest-only, jumbo, construction, and affordable housing) must be considered. Picking the right one from the start will help to smooth out the process.
Starting a Family
Starting a family can be a joyous occasion – but it’s also a moment that should be planned for—the average cost of having a child in the U.S.is $10,000. The price can quickly go up if there are any complications.
New parents should expect and plan for these fees, as well as other out-of-pocket healthcare expenses. Then there’s also the concern of starting an emergency fund, savings account, and preparing for any family leave that may occur.
Planning for Retirement
Planning for retirement is a moment that many people tend to put off, but the sooner one starts it, the better off they will be. Many employers offer retirement plans these days – so be sure to take advantage of them as early as possible. There are other alternatives worth researching and investing in, from stock investments to Individual Retirement Accounts.
*A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. Every state offers at least one 529 plan. Before buying a 529 plan, you should inquire about the particular plan and its fees and expenses. You should also consider that certain states offer tax benefits and fee savings to in-state residents. Whether a state tax deduction and/or application fee savings are available depends on your state of residence. For tax advice, consult your tax professional. Non-qualifying distribution earnings are taxable and subject to a 10% tax penalty.
This blog/website is only made available for educational purposes. It is designed to give visitors general information and a general understanding of select financial topics. It is not intended to provide specific financial or investment advice. Conduct your own due diligence or consult a licensed financial advisor/broker before making any and all financial/investment decisions.