Are you financially equipped to enjoy each stage of your life as it unfolds? Can you honestly afford the common occurrences of things such as marriage and purchasing a home to retirement and even death? Have you thought that far ahead yet? If you’re honest with yourself chances are you’re nowhere near ready for those occurrences in your life. Though you cannot prepare yourself for every circumstance that might present itself in your life, there are steps you can take to make sure that if and when it happens… you’re financially prepared to take care of it.
Wedding (Marriage)
According to CNN Money, the average wedding costs for 2015 can be an upwards of $30,000. Are you and your spouse to be financially prepared for this? Even if you intend to scale back on some of these costs, you’ll need to know how you’re going to allocate the funds. Of course there are several ways you can do this:
- Receive gifts from loved ones – of course this option is free and clear, but you’ll need to determine how much of an out of pocket expense you will have after receiving a gift from those willing to help fund your big day.
- Obtain a loan – some people don’t have the money up front to pay for the wedding and as such decide to take out a loan and repay it on a monthly basis.
- Save money – If your out of pocket expense is a lot after receiving gifts from loved ones and you don’t want to obtain a loan, the only other option would be to save money until you have enough to afford the wedding.
Buying a Home
Buying a home can get pretty costly. As a homeowner, you will be responsible for things that include the mortgage payments, homeowner’s insurance costs, property taxes, utilities, as well as maintenance and upkeep of the property. There are ways in which you can prepare to purchase a home including:
- Improving your credit score – this will open the doors for more home buyer programs and also save you money on overall costs of your mortgage.
- Saving money – if homeownership is something you want but can’t afford, there is always the option to rent a home and save until you can afford to purchase one.
- Budgeting – Part of saving towards your ability to purchase a home will involve the need to budget accordingly.
- Government Programs – there are a plethora of government assisted homeowner programs out there that you could take advantage of. Such programs may offer you benefits that include a smaller down payment, assistance with closing costs, and other financial bonuses that can help you afford your home sooner.
Affording Your Child’s College Education
Assuming you have children, at some point they’re going to need financial assistance in paying for their college education. There are several ways in which you can afford your child’s college education which include:
- Grants, Scholarships – your child may be able to apply for certain grants or scholarships that would pay for a portion or all of their educational needs – free of charge.
- 529 Plans – earnings on your account grow tax deferred, and withdrawals are exempt from federal income taxes as long as the money is used for qualified higher education expenses.
- Loans – student loans are certainly an option if you cannot afford to pay out of pocket right away. There are several types of student loans available, each with its own set of repayment guidelines.
- Savings – Saving of course is the better option when it comes to affording college education for your child. The sooner you start saving towards their education, the more you’ll have once it’s actually time for them to attend school.
Retirement
When you’re 20 something years old chances are you’re not thinking about how you’ll afford to live when you’re 65 years old. There are several ways in which you could prepare for retirement including:
- Work pensions and 401K – if you’re employed by someone that offers pensions or 401K accounts you could utilize this money to pay for retirement.
- Personal retirement accounts – You could opt to have an additional retirement account from which you save additional funds to each month.
- Budget – If you failed to save properly but have a work provided retirement account you could live off of these funds by also staying on a strict budget.
Death
No one wants to plan for death but unfortunately, this is one event in life that we cannot avoid. Here are some ways you can do this:
- Life insurance – obtaining a life insurance policy will provide your surviving loved ones with an amount of money to pay for final expenses
- Prepay Accounts – some funeral homes allow you to pay for your final expense while you’re alive. These accounts would take the expense off of your loved ones.
Getting Help
There is real value in preparation. Rather than waiting for these events to occur you could proactively create a financial glide path with a financial planner. TrueNorth Wealth, a wealth management firm based in Utah, suggests there is tremendous value in meeting with a financial planner. “Most people do not realize how many moving parts there truly are in their financial life” says Joseph Griffin, COO at TrueNorth Wealth. With most clients they generally review the following:
- Are you making prudent decisions with pre and post-tax dollars
- Is your overall retirement plan on-pace
- Are the funds within your 401k or SEP IRA congruent with your financial goals
- Are you paying more in taxes than you need to
- Will you have the income you desire at retirement
- Do you know how to maximize your Social Security benefits strategy
- Does your insurance plan(s) provide adequate but not excessive coverage
- Is your estate plan adequately laid out
Essentially, financial advisors can help you in effectively evaluating your current circumstances, making more informed decisions, and setting yourself up for financial success.
Not sure what wealth management is? You can read more about wealth management on their website.
You never know what life may throw your way, but there are some milestones or circumstances that you are aware of. To prevent your finances from going haywire, it is always best to plan ahead. By evaluating your circumstances, creating a realistic budget, and saving accordingly, you will be in a better position to handle whatever life throws your way. In instances where you’re not sure how or where to start, working with a financial advisor is best.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
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