Financial planning throughout your life

Throughout your life, you make financial decisions to help you to achieve certain goals in life. Financial planning is not just about your retirement or your savings account but can incorporate so much more to help protect your wealth.

A solid financial plan will consist of putting a will in place and a life insurance policy to protect your family. It may also involve a savings plan, paying off debts and your pension. Whilst these are all part of your overall financial plan, there are certain times when these are required, and others when they can wait. Therefore, it’s important to lay out the different stages of your financial plan to determine when is the best time for each aspect based on your goals.

Setting yourself goals

Creating a financial plan includes establishing your goals both short and long-term, as well as what assets you have and how they change over time. Developing your plan throughout your life journey can help you to review and implement different strategies when your circumstances change. Monitoring and reviewing your plan can ensure that your financial strategy gives you the best options.

Your first job

Getting your first pay slip can be an exciting moment. After years of education, it can be really rewarding when you land your first full-time job. Once you’ve been in your job for a month or so, you can start to make yourself a budget.

If you have student debts, and overdraft or need to borrow money to get yourself a new place, budgeting towards paying those off is really important. Once you can set yourself a goal to pay off debts, you can use the same tactics to create yourself savings goals. At this point in life, you may be able to obtain benefits such as pension contributions, life insurance and health insurance from your company. This can help to keep your debts protected whilst giving you time to increase your savings.

new couple

Buying a home

If you’re at the point in life where you are ready to buy a home, it can take good financial planning in order to find the right property at the right price. You’ll need to save for your deposit and obtain a good credit score so that you are eligible for a mortgage.

Ideally, at this stage in life your income is rising, but so are your expenses. Proper financial planning now is even more important at this stage of your life. Budgeting will continue to play a big part in your lifestyle. It may be worth looking now into obtaining life insurance. This is to protect your family including your parents or other co-signers on the mortgage. Insurance advisors can help advise you as to whether you need life insurance. You don’t always have to go with your mortgage provider’s recommendations.

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Getting married

When you get married, your financial plan may change yet again. You may wish to review your mortgage and life insurance as well as combine finances. At this stage, if you don’t yet have children a joint life insurance policy may be beneficial if you’re only looking to cover the mortgage. You may have combined goals to save for major life purchases such as a home together, new cars or holidays. Investing in your pension as well as adding to savings to meet those future goals will be a big part of your financial plan at this time.

Having children

When you have children, there will be another big change to your financial plan. You may wish to start considering University saving plans and save for family holidays and new furniture and clothes etc. In addition to this, you may need to move home and get a bigger house with more bedrooms.

When your children enter into your world, financial planning becomes even more important. You may wish to review your life insurance policy as well as creating a will. These both set out the terms of what would happen to your finances should you pass away. You may want to protect your spouse as well as putting your children as beneficiaries. Life insurance policies can be written into a trust so that they don’t have to pay inheritance tax on the amount. This can counteract any tax paid on the estate, so your family have more financial protection.

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Moving towards retirement

As you work towards retirement, you may see your expenses decreasing giving you the ability to build your savings. With increased assets, you can help to pay for your children’s education and future. Your goals at this stage may be to pay off the mortgage and get rid of any debt, reduce taxes and to grow your retirement pot. Furthermore, your children may be grown up and may leave home to go to University or to live on their own.

You may wish to review your will again and rethink your life insurance policy and whether you need it. Most people have life insurance until they reach retirement age as it can help to continue to pay off mortgages, debts and protect against the loss of income. But with children grown up, you may not wish to continue your policy as they are no longer dependent on your financial income.

Financial planning in retirement

When you reach retirement, you may have already paid off your mortgage and can turn to your savings and pension into your new income. It’s really important to evaluate your budget so that you have enough to meet ongoing living expenses. At this stage, your financial planning needs to ensure that you are able to continue without an income. In the event of a death of a spouse, you may need to adjust wills, trusts and life insurance if you still have your policy. It’s important to plan for all scenarios so that you can be prepared should the unexpected happen.

If you have investments, you may wish to review them to find optimal ways to invest your retirement nest egg. You may need to downsize your property, but it’s important not to make immediate changes. Assess the situation and plan accordingly so you can still enjoy your retirement.

Your goals change as you move through life, and therefore so do your financial requirements. Financial planning at different stages in your life can really help you to meet your goals. Planning your finances in this way can give you more confidence in where you are going in life and help to reduce stress. You can enjoy life more and have peace of mind that you put a good financial plan in place.

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