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Financial Planning For Your Future
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Financial planning for our futures sounds sensible but how many of us really do it?
Coping with today or next month can be hard enough without having to worry about the long term future.
This is very true, it is also a dangerous path to walk, by living only for today we are opening ourselves up for some nasty financial surprises in the future.
Instead build your financial future into your frugal planning now and let tomorrow come safe in the knowledge that you are prepared.
Both myself and my partner have been lacking in some areas of financial planning in the past and we hold our hand up and admit we have been hit ourselves by a few of life's major events completely unprepared.
That's what gives us the insight to be able to give you the heads up on a few of the big life events that may happen in your lives.
It will give you the opportunity to stop and really think about "what if" and "when that happens how will I cope" scenario's and hopefully allow you to prepare yourself for your future.
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picture by Phillip C
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The major life events that require financial planning.
Leaving Home
Leaving the family nest is probably the first major life event we all go through at some point. It can be traumatic and frightening and exhilarating all at the same time, but one thing for sure it's certainly expensive.
Many parents are now trying to put away some savings for their children's future, giving them a chance to get their foot onto the property ladder.
This is becoming more and more essential as house prices all over the world seem to be on the increase. This type of financial planning is in your own hands especially if you have your own children and so should be something you may want to think about for them.
Leaving home may also mean going to university, this in itself is another great expense and student loans can leave many new graduates with big debts as they start their new life. This is especially hard if they are also trying to save money for a deposit on their first property.
Again many parents have planned ahead for this and started to put savings away for their children's education. Imagine leaving university with hardly any debt, not many can say that I'm sure.
Getting Married
Financial planning for your own wedding day use to be unheard of. Surely the parents of the happy couple paid for the wedding. However with the average wedding now costing something like £15,000 in total it is completely unrealistic to expect someone else to pay this much on your wedding.
So planning your own wedding years in advance and having a little savings pot tucked a way will help make your wedding day all that you have dreamt of. It is possible to have the wedding of your dreams but on a frugal budget, believe me.
Once married, planning your joint finances is important too so that you make the most of your increased overall wealth. Using any joint savings to help offset mortgages and loans is a great financial benefit and will save your thousands over the years.
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Family
Planning financially for a family is essential. Finding out before hand what maternity benefits and any child benefits you will be entitled to will help you to plan your budget.
Start to save as much as you can as soon as you know you are pregnant. The early costs involved once your baby is born can be quite large and you will not want any financial distresses during these early days.
You will also have to decide whether or not you will be giving up your day job to look after your children and for how long.
This will have a massive impact on your family's finances and proper financial planning is the only way to manage this new situation. It may be that your budget shows that you will not be able to cope financially on just one wage and so you will have to reassess your plans, perhaps working part time etc.
Work Life
Many people are happy to spend most of their working life working for the same company; it is steady and has built in financial securities.
But this is not for every one and if you suspect that you are one of the many people who may one day want to be self employed, planning your finances early on will help give you a cushion of money to help get your new business off the ground.
I myself spent many years building up savings so that I could start my own business. Without that forward planning and living a frugal lifestyle it would have been totally impossible.
Unfortunately it is more and more common to hear of people being made redundant from their jobs. This can be a massive blow and can leave many people with huge debts.
Planning for this possibility by taking out insurance policies to pay off your major debts can be one of the single most important financial planning decisions of your life.
Retirement
How will you cope when you retire? That is a question I hear people asking each other all the time. I think it is becoming more and more of a pressing problem for people as we are all now living longer and our money will have to stretch further.
We also don't want to have to penny pinch once we retire, we want to have fun and freedom and this costs. Planning for your retirement early on in your working career is the only way to provide yourself with financial security.
There are many ways people are preparing for their retirement, Pensions and stock market investments are the most common, but property has also become a popular way to put aside a little nest egg for the future.
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picture by Brave New Traveler
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Top tips to live your financial life by
Financial planning for your future sounds like hard work, especially if money is tight.
But by following these golden rules to live your life by, you may find that money isn't such the big frightening issue you thought it was.
- Live within your budget - if you spend less than you earn you will be able to save, if spend more than you earn you will have debt. A simple philosophy I know, but true none the less.
- Use credit wisely - Use credit cards only when you have to and make sure you pay off the bill each month. Never use store cards, ever!
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- Save - make saving a lifelong habit. Introduce saving to your children from an early age and save yourself as often as you can.
- Search out the best deals- check regularly to see if your bank accounts
and credit cards are the best ones for you and you are getting the
best deals.
Moving accounts for a better deal is no longer the hassle it used to be and you could be earning yourself extra money.
- Take advice - for major financial planning decision seek out a registered independent financial advisor. Life is too short to make mistakes with your money.
- Pay your taxes - As the saying goes "there are only two certainties
in life, death and taxes".
Always pay your taxes on time and never try to lie to the taxman, they will always find you out and this is a very expensive mistake.
- Protect your family - take out good insurance policies to ensure the financial future of your family. Protecting your home against unexpected events will ensure that your family will always have somewhere to live.
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