Financial Planning for Major Life Events: Marriage, Children, and More

Whether you’re a young adult thinking of marriage, navigating the complexities of divorce or part of an older couple planning your retirement and legacy, financial planning is a crucial tool that can help you maintain stability and achieve your long-term aspirations.

1. Getting married
Approaching marriage with a solid financial plan ensures a smoother transition into this new phase of life. When you marry, your financial decisions will often affect your spouse, making it essential to discuss and align your financial goals, attitudes and habits.

 

Joint financial planning involves creating a shared budget, aligning on saving strategies and setting mutual financial goals. This process can include:

Establishing a joint budget that accommodates both individual needs and collective goals. Planning for short-term objectives, like a honeymoon or home purchase, and long-term goals, such as retirement or investments.

Regularly reviewing and adjusting your financial plan to ensure it remains aligned with your changing life circumstances and goals.

2. Welcoming a child
The arrival of a child is a joyous event, but it also necessitates significant adjustments to your financial planning to ensure you can comfortably provide for your family’s future. Children bring additional expenses, from day-to-day needs like food and clothing to longer-term costs such as education and healthcare.

It’s essential to adjust your budget to accommodate these new expenses. Consider setting up an education fund for your child. Regular contributions, even small ones, can grow over time and provide a substantial sum for higher education.

Opening a savings account for your child can be a great way to build a nest egg for their future, be it for education, a first car or a deposit on a house.

Ensure that your life insurance coverage is sufficient to secure your child’s future in the event of your untimely passing and consider income protection insurance to safeguard your family’s lifestyle in case you’re
unable to work due to illness or injury.

3. Dealing with divorce
Divorce can be one of life’s most challenging events, not just emotionally but financially too. Navigating this period requires a thoughtful and thorough re-evaluation of your finances to ensure a secure and stable future.

Assets and liabilities acquired during the marriage are typically divided. This process can involve splitting property, savings, pensions  and even debts. It’s essential to understand your financial rights and obligations clearly. The division of assets can significantly alter your financial landscape, impacting your lifestyle, savings and retirement plans.

Your income and expenses are likely to change. Creating a new, realistic budget is a crucial first step. It’s also wise to close joint bank and credit accounts to prevent future financial entanglements. Open individual accounts for your personal use.

4. Dealing with major life transitions
Changes in health or lifestyle can require a review of your health insurance, ensuring it covers your current needs.

Navigating life’s major events with a well-thought-out financial plan that includes estate planning and adjusting your insurance and investment strategies can provide you with the security and peace of mind to enjoy life’s journey, knowing that your financial affairs are in order.

So, if you’re facing significant life changes or want to ensure your financial plans are on track, speak to your financial adviser and they will be able to assist with this in an efficient way.

Written by: Algar Kasema

Date: 28 February 2024

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