Major Life Events That Need Financial Planning
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The importance of financial planning cannot be downplayed. It’s key to establishing long-term financial stability while minimizing the stress and anxiety that comes with an uncertain financial future. Financial planning is the best way to make smart financial decisions. An effective financial plan can help you get ready for unexpected life-changing occurrences. Described below are four major life events that need financial planning.
- Funeral
Funerals are costly, which can financially burden your loved ones, especially if they aren’t prepared to cater to the expenses. Preplanning your burial can help ease things up for those you leave behind after passing away. When developing a financial plan for your funeral, consider creating a budget that envisions your burial desires and plans. Once you’ve made a realistic funeral budget, consider how you’ll finance it. You can pay for your funeral expenses by:
- Prepaying your funeral expenses: Most funeral homes allow people to pay their burial expenses in advance. Prepaying your funeral costs lets you lock in the prices for the services you need, eliminating the possibility of prices rising due to inflation. Before making any prepayments, ensure your preferred funeral home provides the services you need, such as funeral services Riverview
- Create a funeral plan savings account: You can put money in an account designated for your funeral
- Final expense insurance policy: This is meant to cover end-of-life expenses like funeral costs
- Retirement
A retirement financial plan helps you prepare for your future life today so you can continue achieving your goals and fulfilling your dreams independently. The plan includes:
- Setting retirement goals
- Approximating the amount you’ll need
- Making investments to build your retirement savings
A retirement plan defines the path to attain your retirement objectives without being financially dependent. It enables you to develop a regular income flow after retirement. A retirement plan provides fixed earnings that substitute your pre-retirement income. Besides making you financially independent, a retirement plan can help you cater to the medical emergencies that come with aging without spending your savings.
- Buying a new home
A new home purchase requires a substantial financial commitment and proper planning. With a well-prepared financial plan, you can ascertain that your dream house matches your financial responsibilities and capabilities. When planning your finances to buy a new home, start planning and putting money aside for your dream house early enough. When preparing a financial plan to purchase a new home, consider:
- Checking and improving your credit score to boost your chances of securing better loan terms
- Paying off your debts to reduce your debt-to-income ratio and make yourself attractive to lenders
- Setting a home purchase budget to determine how you can afford
- Determining your down payment size so you can start saving
- Marriage
Planning your finances before marriage is key to achieving your financial goals after marriage. It helps you and your partner determine how you’ll pay for the wedding. You can set up a savings account to finance your marriage, which helps keep costs down, since you’ll use cash to pay.
You can opt for a personal loan if you haven’t allocated enough savings to cater to your wedding and wish to avoid getting into credit card debt. Additionally, planning your finances lets you decide whether to get into a prenup agreement or even open separate or joint accounts.
Endnote
Planning your finances helps you make informed decisions while establishing your financial security. Effective financial planning can help you prepare for major life events like funerals, marriage, retirement, and more.
