Financial planning for major life milestones

Throughout our lives, we have many significant moments that help to shape who we are and how we live.

When we are young, these include events like graduating from school, getting our driver’s licence, or starting our first job.

As we get older, these moments tend to have a larger impact on the path we set for our future, and more often than not… they also require substantial financial consideration.

Today, we look at how financial planning for some of life’s major milestones can help keep you moving forward and support your financial security for many years ahead.

Finding someone to love is wonderful! We understand that you never want the romance to end, but this is a very important stage of your life and you need to keep a level head when it comes to combining finances with your partner.

Whether you plan on getting married or not, merging your households requires some open discussions around financial goals. How will you combine your savings and what is your long-term plan? You both need to be completely transparent about any existing debts and also appreciate that there could be differences in earning capacity.

Plus, you could also have very different ideas about spending… trading up to a new car every five years might be important to you, but not something your partner is keen on. Identifying potential pain points early on can allow you to find mutually agreeable solutions. Then you can create new habits that help you both grow your wealth together.

It is also worthwhile considering whether a prenuptial agreement would be appropriate. There is now far less stigma associated with this type of contractual agreement and they are becoming increasingly common as people are getting married later in life.

In the lead up to buying your first home, it’s critical that you have a solid financial plan already in place. You need to have a clear understanding of your savings capacity, which will eventually influence your borrowing capacity.

How much income do you have and what are your existing financial commitments? The difference between the two will give you an indication of how much you will be able to save for a deposit and what you will be able to afford to spend on a property.

Once you have figured out these points, you can assess how long it will take before you are in a position to purchase.

Online calculators are extremely common, but we recommend you also seek professional advice to make sure you access all the relevant government support available for home buyers. There are many opportunities available to help you achieve your home-owner dreams!

When you welcome that sweet bundle of joy to your life it’s easy to get caught up in the ‘new-parent’ bubble. But this is also when you need to make sure you are financially secure. Children bring so much joy, but they also impact your financial plans.

This is the time when you want to make sure you have adequate insurance cover – income protection, life insurance, disability or trauma cover… they should all be part of your plan.

These personal insurances offer peace of mind that you and your family are prepared, should something unforeseen happen.

Writing a Will is another pragmatic exercise that you should undertake when you start a family, because you never know what tomorrow will bring. While there are do-it-yourself Will kits available, there are complexities that need to be considered… so it’s advisable to seek the advice of a solicitor. It’s important to remember that a Will is one of the most meaningful legal documents you will ever create, so you want to make sure it’s done properly.

As you progress in your career, it is likely that your earning capacity will increase, and while you build your wealth, additional investment opportunities may arise. This is when financial planning is essential. Smart investors implement long-term strategies and they understand the value of building a well-balanced, diversified portfolio. Investing rather than spending additional funds as your earning capacity increases can make a huge difference to your lifestyle later in life, due to compounding returns.

At this stage, taking control of your superannuation and making sure you’re utilising tax-effective strategies should be a priority. Seeking advice from a professional financial adviser can ensure you are taking full advantage of every opportunity.

Your retirement years could span for decades, and once you are no longer receiving a regular weekly wage it’s important that you have the financial security to support the lifestyle you want to lead.

The earlier you start retirement planning, the better your financial position will be when you eventually stop working.

Having a plan in place to preserve your wealth will deliver you peace of mind about your long-term financial independence.

As part of the planning process, you need to ask yourself questions about how you imagine your golden years… what are your retirement goals? Do you want to be able to take an overseas holiday every year? Do you want to be able to help your children financially?

Again, a professional financial adviser will be able to assist you with your plans to help you retire life ready. If you’d like to find out more about how we can help you with any of your financial planning, please contact our team today. Read more Financial Planning articles.