Living Well through Planning Life’s Big Events
Life is full of significant milestones. From buying your first home to planning for retirement, these events come with both financial opportunities and financial challenges. With proper planning you can ensure that you’re financially prepared for whatever life throws your way. So, here are some tips to help you financially navigate and live well through life’s big events.
1. Establish a Solid Financial Foundation
Before tackling specific life events, it’s important to have a strong financial foundation. This includes creating a budget, building an emergency fund, and managing debt. A well-established financial base will provide the stability needed to handle major life changes.
Aim to save at least three to six months’ worth of living expenses in an easily accessible account to cover unexpected expenses. Budgets can be accessed for free through sites like Money Smart or Glen James’s Spending Plan. If you’d like to learn more, we interviewed Glen on episode 2 of our START WELL® podcast.
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2. Buying a Home
Purchasing a home is one of the biggest financial commitments most people will make. Start by assessing your financial readiness, which includes having a stable income, cashflow that can support realistic interest rates, and enough savings to avoid lender’s mortgage insurance.
It’s wise to work with a proactive mortgage broker to understand what you can afford in the long term and how to be able to pay down your mortgage quicker. Make sure you consider any additional costs that come up such as property taxes, insurance, maintenance, and potential renovations.
3. Starting a Family
Starting a family brings a lot of joy and fulfilment, but with it comes a whole host of new financial responsibilities. From changes in career, to prenatal care and delivery costs, to childcare and education expenses, planning ahead is crucial.
Books like Kids Ain’t Cheap by Ana Kresina are great resources to help you plan for parenthood and your family’s future. Kids Ain’t Cheap is a recent award winner for Best Book 2024 for The Money Awareness and Inclusion Award, and Ana appears on episode 4 of the STARTWELL® podcast.
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4. Career Changes
Whether you’re switching careers, starting a business, or pursuing further education, career changes often come with financial implications. If you’re changing jobs, factor in potential changes in salary, benefits, and retirement plans. For entrepreneurs, creating a detailed business plan and securing adequate funding is essential. Those pursuing further education should explore scholarships, grants, and student loans. A strong financial plan can help you manage these transitions smoothly and minimise financial stress.
5. Major Health Expenses
Unexpected health issues can have a significant financial impact. It’s important to have adequate personal insurance to fill the gap in your financial position in the event of death, sickness or injury. Planning for the unexpected, ensures that your loved ones are protected financially and you are not left without options.
6. Planning for Retirement
Whether you’re aiming for a traditional retirement or following modern approaches like FIRE (Financial Independence, Retire Early), robust planning is essential. Start by estimating how much you’ll need to maintain your desired lifestyle in retirement. A helpful starting point is the ASFA’s Retirement Standard, which releases a quarterly report on the cost of a comfortable retirement (currently just under $73,000 for a couple).
Use tools like the Super Balance Detective website to determine your current superannuation balance needs based on your year of birth and ASFA’s figures. This will give you an idea of where you stand in terms of financial readiness.
There are many considerations at this milestone, such as maximising social security benefits, planning for future aged care, boosting your superannuation, downsizing your home, helping out children financially, and the changing costs of healthcare. Working with a financial adviser who specialises in retirement planning can provide valuable insights and help you develop a comprehensive retirement strategy tailored to your needs.
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7. Estate Planning
Estate planning is about ensuring your assets are distributed according to your wishes after you pass away. You should consider working with a solicitor or an estate planner to navigate the legal complexities and minimise potential tax liabilities. Proper estate planning can provide peace of mind and ensure that your loved ones are taken care of according to your wishes.
Planning for life’s big events, while still living well requires foresight, preparation, and sound financial management. By establishing a solid financial foundation, understanding the costs associated with major milestones, and seeking professional advice when needed, you can navigate these events with confidence. Remember, the key to successful financial planning is to start early and be proactive. With the right approach, you can rest easy knowing that you’re financially prepared for whatever life brings your way.
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