Does your financial plan fit with your current life? If it’s more than a few years old, there’s a good chance it doesn’t. After all, your financial plan isn’t just a static document. It’s a dynamic set of guidelines that need to be adjusted whenever your life changes. As your income changes and goals and circumstances shift, you need to update your plan accordingly.
Here are five times in your life when you may need to make big changes to your financial plan.
When You Get Married
Getting married is often the first major life event that leads people to think about updating their financial plan or getting a financial plan in the first place. Once you get married, you also need to marry your finances.
The process should ideally start before you get married as you review your debts and income and talk about your goals as a couple. Together, you should make sure you’re on the same page and working together to get to where you want to be.
In fact, if you’re in a long-term relationship in which your finances are intertwined, you may also want to have a shared financial plan addressing all of these issues, even if you’re not married.
When You Have Children
Having a baby means big changes to your life, including your finances. If one parent will be staying home with the little one, you may need to make adjustments to your budget to account for the reduced income. If you’ll be relying on daycare, that’s another big expense you’ll need to add to your budget.
Other issues to consider include updating your insurance to include new dependents, setting up a college savings account, and making sure you have adequate life insurance.
Finally, if you don’t already have one, it’s absolutely crucial that you have a will and other estate planning documents so that your loved ones, including your children, are protected.
When You Change Jobs
The days of working for one employer over the course of your career are long gone. Chances are you are going to change jobs at least once, if not numerous times, before you retire.
To ensure that your career shifts result in steps up on the financial ladder, you’ll want to review your financial plan. Making decisions about your retirement savings is paramount (such as whether you’ll roll your money over to a new employer’s plan or an IRA), but you’ll also probably want to think about issues like insurance, other benefits, and taxes.
When You Get Divorced
It may not be a happy change, but divorce is a reality for many people. If your marriage ends, a financial checkup is a must.
Your income will probably be changing, which may necessitate changes in your budget. You will also need to think about changing the beneficiaries on your retirement and insurance plans, developing a new savings strategy, and more.
When You Retire
When you stop working, that doesn’t mean your financial plan is off the hook. As you prepare for this major life change, you’ll need to make sure you are prepared financially for life after full-time work.
This includes creating a retirement budget fits your lifestyle and a plan for drawing down your savings in a responsible way. You’ll also want to think about issues such as where you will live, end-of-life care, and estate planning.
If you’ve experienced a big life change recently and need financial guidance, please call.