I started financial planning and management a little later than I should have. We all tend to become too lackadaisical and over-confident in our abilities to handle financial issues. But, finances and their management involve long-term efforts with significant forethought. Yes, you cannot be prepared for every financially intensive incident in life, but certainly can come up with a plan to deal with definite life events.
Several life events are either certain or most likely to occur. These events, and you will agree, involve the expenditure of a lot of money and can be quite stressful to manage in the absence of smart financial planning. Therefore, even if you do not wish to plan every detail of your life (which is fair enough!), you should, unfailingly, prepare for certain life events beforehand. At least financially speaking.
What are those life events that require smart finance management? Read along, and you shall know.
- Health Crisis
Anyone who keeps tabs on the latest on health would agree that humans are reporting health crises at a faster rate. The rate of heart attacks, cancer, and epidemics (or pandemics) has been consistently and dangerously increasing. People with the most perfect lifestyle are showing signs of vulnerability to ailments. All of this makes it imperative to manage finances in matters of health. You must purchase good health insurance for yourself and your family members.
Couple it with life insurance that can offer monetary relief for some time following your death. Other things to consider, and which involve the expenditure of money, include advance directives, investment in trusts, and powers of attorney. Towards these, you will have to earmark a definite sum from your income regularly.
You don’t have to marry to know the exorbitant outflow of money during weddings. People who want to organize the simplest of weddings out there will nevertheless end up spending a good sum. All in all, weddings burn your cash, but the delight of being a part of it makes it less hurtful. But the pinch lingers every time you check the bank statement.
Weddings can be a really sensitive factor in finance management. There are two people involved, and so are their respective financial resources. So, there are a handful of things you must do: enter into a pre-nuptial agreement prior to marriage that provides for the devolution of assets post-divorce, review your insurance purchases and apply for a modification to accommodate interests of both, and update your banking strategies to accommodate your spouse’s. Similarly, start saving for a wedding at an early stage. It is always a good idea to create an emergency or a wedding fund, just in case.
- Buying a home
It is the dream of many to invest in a home. Small or big, we all want a place we can go to and call home. But, quite often, our dreams are not as easy to realize as we wish, and this is especially the case with real estate property. Purchasing a house is a huge financial commitment. And the expenses do not stop with the purchase; maintenance of the house is a life-long expenditure. As a result of this, you will end up using your money on insurance, repair works, refurbishment, and whatnot. If you intend to buy a house in the future, you should start saving immediately.
I keep saying that there is no age to retire. Retirement is a mental state. You don’t wish to work anymore and spend your time as you deem fit. That is retirement. Of course, there can be other reasons that affect retirement, and many of them are not suitable such as those involving health issues. Whatever the reasons are, you will need to have money to sustain yourself appropriately. This is especially of utmost importance for senior citizens or those with disabilities or other health issues. Experts advise that people should invest in mutual funds, open up a savings account, and invest in schemes with lock-ins and reasonable interest rates, among others, for long-term planning culminating in a decent post-retirement life.
- Children and their well-being
Once you decide to grow the family, your responsibilities grow by default. Firstly, you must not make this decision in haste because raising a human being is a daunting task, emotionally and financially. Unless you are in the right frame of mind and have the right kind of resources at your disposal, you should not grow your family. Because quality life is as much necessary to a kid as it is to you; secondly, start investing in them as early as you can. Devise a plan, rope in your spouse (unless you are a single parent), and come up with strategies to effectively distribute your money. Consider parameters such as the education, health, and lifestyle of your children and invest accordingly.
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