We all go through life with a rough idea of how we want it to turn out. Living your life day by day may be a simple way to live but it could get tiresome and boring. We all need to identify goals and dreams so our everyday lives will be filled with purpose and direction.
In most cases, our personal ambitions have corresponding financial goals. There are specific life events that may come out as a primarily emotional decisions. However, even these events must consider the financial effects so you know if you are really prepared for it or not.
4 events in your life you need to be financially prepared for
We all go through a lot of life events but there are 4 major events that require a huge amount of financial planning.
Let’s start with your education. Although this is mostly something that your parents will prepare for you, a lot is also riding in how you take care of your finances while you are studying. Some kids never realize how important it is to have a financial plan that will help them in money management. Even if you have student loans to pay for your current needs, it is your responsibility to minimize the need for that debt. Try to be responsible in how you use your money by creating a budget plan. Make sure that every expense is accounted for and a part of your plan. And while you are still studying, why don’t you create a payment plan for your student loans? That way, when the billing starts coming in 6 months after you graduate, you know how you can pay down your debt.
The next life event that you have to prepare for is your marriage. A lot of people think that this is a purely emotional decision. While it is important, you also have to peek into the financial lives that you will also be combining. Saying the vows “for richer, for poorer” is very easy. But when you are up to your ears with unpaid bills, your child is crying because of hunger and you are about to be evicted in you home – your vows will mean nothing. It is important that you think about the financial situation of the person you are marrying. They don’t have to be rich but a healthy financial history is a great quality. If your fiancee has some debt problems, you need to discuss that. The same is true if you have financial problems. These can be student loans or credit card debts – make sure you air it out in the open and do not be scared of your fiancee’s reaction. If they love you like they say, they will share in the burden with you.
The third event that you need to be financially prepared for is parenthood. Having another mouth to feed is no joke. You do not only have to be emotionally and physically prepared to have kids – you must be financially prepared too. Make sure you do the math and you understand the costs involved in raising a child. You have the costs of childbearing and childbirth. You also have to prepare your home to make it safe for the little one. You need to buy clothes, toys, furniture – all of these to make the first few growing up years of your child the best there is. You will be supporting your child for the next two decades and that can seriously affect all of your lives.
Lastly, you want to be ready for retirement. There are many tips and suggestions to avoid the common mistakes in retirement planning but the bottom line is, you have to plan. Start as early as you can so you can put in a small amount every month. If you start late, you have to make bigger monthly contributions – otherwise, you will not have enough money when you retire. This later stage in your life is when you stop working so whatever you save today will be used to finance your needs in the future. Make sure you are prepared for that so you can stick to relaxing and having a good time when you retire.
Different financial plans
All of these life events are significant but they will even be more memorable if they come off without a hitch. The only way that you can do that is by creating a financial plan.
There are many online templates that you can use – you just have to know where to find them. Google.com and About.com both have great lists of templates from all over the Internet. Choose which one is perfect for your own unique financial needs.
You can opt to make one big financial plan for all your life goals or you can create a different one for each. There are also various plans that you can use – depending on the type of goal that you have. Here are some of the plans that you can use:
All of these plans can help you reach your goals by giving you the means to monitor and measure your progress. Do not be discouraged if you can only contribute a small amount for some of your goals. A small amount is better than nothing after all. Of course, you can always increase your income. Anything is possible – you just have to create a plan to give you direction.