10 Financial Life Events

Personal Finance - 10 Financial Life Events
There are many ingredients to finding financial success in life.
What I have learned from this Personal Finance class is that knowledge is a
powerful tool that can prepare me for the financial challenges and
hardships that I will face in my life.
The Financial Life Cycle - Financial Life Events
Summarized from Personal Finance “Turning Money into Wealth” by Arthur J. Keown
Life Event 1: Getting Started Lay the Groundwork
Before you can make financial progress and plant the seeds for your future
financial success, you need an understanding of investments and personal
 Identify Your Goals
 Nothing Happens Without a Plan.
 Begin Saving for Your Goals
 Manage Your Portfolio
Life Event 2: Marriage
Most married couples plan their wedding down to the smallest detail but spend
little time talking about money and planning their financial lives together.
 Get Organized
 Revisit Your Financial Goals Nothing
 Happens Without a Plan.
 Reexamine Your Insurance and Benefits
 Reexamine Your T axes
 Make a Will
 Make It Work
Life Event 3: Buying a Home
Your home is your biggest investment, so it shouldn’t come as a surprise that
purchasing it has financial implications.
 The Purchase Fits Your Financial Plan
 Consider Tax Implications
 Take Care of the Details
Life Event 4: Having a Child
The cost of raising a child from birth to age 18 runs about $222,360 and the cost
is rising. When you add in the cost of a college education and lost wages
resulting from child-rearing duties, U.S. News and World Reports estimates that
for a medium income family, a child requires an investment in excess of $1.45
million over 22 years. Yikes! Certainly, there is more to life than money, and you
just can’t quantify the joys and satisfaction of raising children. But you want to
make sure you take the financial pain out of having children by planning ahead.
 Survey Your Finances
 Plan for College -Time Value of Money.
 Reconsider Ins Needs, Protect Against Major Catastrophes.
 Update Your Wills and Trusts
 Take Advantage of Tax Savings
Life Event 5: Inheritances, Bonuses, or Unexpected Money
An unexpected windfall can go a long way toward helping you reach your goals if
you make it part of your financial plan.
 Examine the Priority of Your Goals
 Reexamine Your Goals
 Consider E state Planning Examine the Tax Implications
Life Event 6: A Major Illness
It can happen to anyone—in fact, most of us know someone who has had to face
the news of a major illness. The impact is twofold—first, the devastating news,
then the financial impact. If you ever have to face such a tragedy, you’ll want to
make sure the financial impact is as controlled as possible, thereby allowing you
to focus on the healing aspect.
 Reexamine Your Finances
 Take Advantage of Tax Breaks
 Alternatives to Finance Your Illness
Life Event 7: Caring for an Elderly Parent
Complicated emotional and financial issues can arise as you reach out to help
elderly parents. Finding the right solutions takes positive and clear thinking and,
as with all of the areas we have looked at, works best with a plan.
 Health Care and Estate Planning Concerns
 Oversee Your Parents’ Financial Affairs
 Discuss Long-Term Health Care Options
 Estate Planning
Life Event 8: Retiring
While it may seem like it will never happen, there will be a time when you retire.
Just as with everything else in life, the only way it will happen successfully is if
 Develop a Retirement Income Plan
 Manage Your Income in Retirement
 Review Your Insurance Coverage and Your Will
 Keep T rack of Important Retirement Planning Dates
Life Event 9: Death of a Spouse
The loss of a spouse has substantial financial effects. You need to review your
financial plans and the financial plans of your spouse to make sure that the
assets are distributed properly.
 Organize Financial Material
 Contact Sources of Survivor Benefits
 If You A re the Executor, Carry Out Your responsibilities
 Change Ownership or Title to Assets
 Review Your Financial and Retirement Needs
Life Event 10: Divorce
With over 40 percent of all first marriages ending in divorce, this is a life event
that affects many of us. Not only are money problems the major cause of divorce,
but divorce usually leads to reduced income and the burden of expenses that
were formerly shared. Moreover, the financial impact of divorce is many times
compounded by the cost of the divorce itself. If you have to experience this life
event, there are a number of steps you can take to lessen its financial impact.
 Prepare for Divorce (eliminate and avoid debt)
 The Best Protection Is Knowledge.
 A void Credit Damage
 Revisit Your Financial Goals
 Reexamine Your Insurance Coverage
 Rework Your Budget