14 Major Life Changes — and Their Financial Planning Implications
In our last two blogs, we explored the financial planning moments in everyone’s life from birth to adulthood. In this article, I’ll be continuing that theme — with a twist. That’s right! With the “standard” age-based moments out of the way, I’m turning now to other big life changes that require financial planning or a planning update.
One of the reasons why we offer annual financial plan reviews is because things change. Consider what’s different in your life today compared to a year ago. Did you reach a major milestone? Accomplish a goal you’ve been working toward? Maybe you came across a roadblock and had to take a different route.
Whatever the case, it’s likely that something has changed. And while shifts big enough to be called “life changes” might not happen every year or at all, some of us enter spans of time when we encounter a lot of them. While this certainly isn’t an exhaustive list, let’s explore what some of them — and their financial planning implications — are.
Celebrations & Achievements
Graduating College or University
Graduation season is almost upon us! It marks the school-to-work-life shift when you might start earning more income. And, for some, it also means that it’s time to start paying back student loans. Sure, you could take a year of forbearance … but don’t forget that interest will accrue during that time, leading to higher balances to pay later. Instead, you can use this last bit of interest-free forbearance time to design your repayment plan and see how it fits into your cash-flow plan. In fact, it’s a great time to start budgeting if you don’t already since you (hopefully) won’t be living on packets of ramen anymore.
If it’s almost graduation season, then wedding season is right around the corner! If you’re tying the knot with your significant other, you’re likely approaching other shifts. A wedding is huge event to plan — even if it’s just a small gathering of family and friends. But don’t forget about the fact that you’ll be filing married (either jointly or separately) for the tax year during which you get married!
And then there are the other financial components of marriage. Will you combine the accounts you already have? What are your financial goals as a couple? How will you manage your saving and spending? What are your estate planning goals — or how does marriage change the ones you have? What about going on your spouse’s employee benefits? The list goes on, and we can help you with those to-dos, from starting these discussions with you and your partner to celebrating your marriage and achieving your goals along the way.
Growing Your Family
Bun in the oven? Adoption almost complete? There’s a lot more to plan for when growing your family than gathering those baby supplies and starting a college savings plan! We can, of course, assist with your savings plan for your future university graduate. And we’re here to help you adjust in other ways. Like to everyday added expenses or reviewing your employee benefits to see if switching to a different health insurance plan might be beneficial.
We know that families grow in many different ways. You might be bringing a friend or family member’s children into your household as their guardian. Perhaps you’re welcoming an older friend or relative who can no longer live alone or who needs care into your home. Whatever the case, adding dependents to your household can impact your budget — and your taxes. Adding to your family is also a great reminder to check in on your estate plan to ensure that everyone will be cared for in the event of your passing.
Our furry friends are part of the family, too! If you’re adding a pet to yours, let’s chat pet insurance and whether it’s right for you. A little cash-flow planning can help you better understand what you’ll need to budget for everyday expenses like food, treats, and toys (and Prozac, if your pet is as anxious as my cat!) — as well as for costs that come around less often, like licensing, flea and tick prevention, and vet visits.
Financial Independence or Retirement
Yes, it’s a big deal! From getting the timing right to knowing what you’ll spend and how your money will reach your bank account when you’re no longer earning a paycheck, we’re here for it. We can also assist you with health care planning, whether through Medicare, the Marketplace, or an individual plan. And, of course, your “no longer working” date isn’t the end date of your financial plan! You’ll be invested for years to come, which means that your retirement or financial independence year is a great time to check in on your risk tolerance, especially if you haven’t completed an investment planning consultation in a while.
If you’re buying a home, it’s likely been a goal in your RightCapital for a while. We probably worked together to identify the purchase price, mortgage term, and interest rate that were right for you. Maybe we also assisted you with a savings plan to build your down payment and a “new furniture fund,” too.
Now that you’re ready to buy, it’s time to obtain a fresh homeowners insurance policy. Just reach out for recommendations on the amounts of coverage you should have, the deductible that’s right for you, and more. Then, when you sign your purchase agreement, send us a copy! We’ll use it to update your property ownership information in RightCapital, and we’ll hold onto it for tax season, too.
Moving or Relocating
If you’re prepping to move across town or across the country, your finances are almost certainly involved. Let’s chat about moving costs, job options, and cost of living changes to help you get ready. We can also get into homeowners or renters insurance, changes to your tax situation if you’re moving to a different state, and more — as well as how all of it fits into your financial plan. Just don’t forget to send us your new address!
Whether expected or unexpected, career changes can be exciting! Perhaps you received a promotion or are switching jobs for higher income, better benefits, a shorter commute, or a work-life balance shift. It might be clear to you that more income likely requires some planning.
That new employee benefits guide might also need a review. And if you’re taking an expected pay cut (and cutting work-related stress alongside it), this might be the perfect time for some cash-flow finessing. Whatever the case, we can review how a job change and the related change in pay can impact your tax situation and your overall financial plan.
Difficult Things & Hard Times
No, you’re not experiencing deja vu! Career changes can also fall into this category. Maybe it’s a demotion, pay cut, layoff, or job loss. Let’s check in on your emergency and future opportunities fund (EFOF) to see what kind of runway you have to find a new gig or supplement your reduced income. We can also review your cash-flow plan to find ways for you to reasonably reduce spending and make this time easier on you financially.
Ending a marriage comes with financial challenges alongside potential legal ones. We can work through the logistics of your divorce agreement with you to divide bank and investment accounts accordingly. Such a shift generally necessitates a financial plan update and a cash-flow refresh, too. If you’re going through a divorce, we also encourage you to review your estate plan and beneficiaries, then make any changes accordingly.
Death of Partner or Spouse
Losing your significant other isn’t something that anyone likes to talk about, but it’s likely that one member of a couple will pass away before the other. We can help you to navigate the financial side. From titling your deceased loved one’s accounts in beneficiaries’ names and determining from which account to pay their final expenses to understanding how your financial life will be different after loss, we’re here. To help you prepare financially for a worst-case scenario, let’s chat life insurance next month. While dollars and cents don’t help emotionally, having the insurance you and your family need now could help you or your loved ones avoid additional emotional strain after a loss.
Disability or Catastrophic Injury
Ever had to take advantage of your disability insurance? While I hope that the answer is “no” for you, I have. I broke my elbow a little over a decade ago. While it certainly wasn’t catastrophic and didn’t even extend into the long-term disability time frame, it was tough. There were ambulance and medical bills, travel and hotel expenses, lost wages from time away from work, and then the strain of a will-never-get-back-to-100% recovery on top of it all. I navigated it alone.
And I’m here to tell you that, while we’re not able to attend medical appointments with you, we’re here for you on the financial side. From assisting you with a disability claim to working through changes to your budget and understanding how everything will impact your financial plan, you don’t have to go it alone. If you’d like a review of your disability or medical insurance coverage, let’s chat in May.
We’re all too familiar with wildfires in Colorado after the summers we’ve had over the past few years And growing up in the midwest, I know all about rushing to the basement when a storm with tornado-producing potential rolls in. But did you know that there are fault lines in Colorado? Whether fires, storms, floods, or earthquakes, we can’t accurately predict natural disasters. But we can certainly prepare for them. I feel like I’m on a roll here with these insurance planning invitations, so let’s make sure your home is properly insured next month!
Putting “windfall” in the “Difficulties & Hard Times” section might seem a little off. But I included it here because windfalls can be … difficult. Maybe it’s tough to process due to receiving a windfall as an inheritance from a deceased loved one — or an evil relative. Perhaps it’s hard to figure out what to do with it. Or perhaps you’re finding it hard to process the emotions associated with it. Whether it’s one of the above or something else entirely, let’s chat.
We’re definitely not therapists, but it’s often therapeutic to talk through financial issues and make a plan. So let’s discuss the windfall you received, why you received it, and what you might do with it. Maybe you’d like to honor the person who gave it to you. Or perhaps you want to figure out what to do with a large sum so that it can make a positive impact in your life or in memory of a loved one. And if you’re thinking of using it to pay off a debt, we can help you determine whether that’s the best idea. So whatever your windfall, we can help you make strong decisions for your next steps with it.
Have you experienced a life change that I didn’t mention here? Let me know, and I’ll consider it for a future article. And if you have one of these — or another — coming up in your life, feel free to find a time on the calendar. If you’re going through a difficult time, we’re here for you, and you don’t have to go it alone. And if you’ve accomplished a milestone or getting close, we’re grateful for the opportunity to celebrate with you.
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