Achieving certain milestones in life are always events to be celebrated and proud of such as starting a family, getting married, or purchasing a home. Because these milestones are so special and important, it can be easy to get caught up in the moment. However, it is important to remember that these certain milestones sometimes require ample financial preparation, so finding ways to get organized can help your planning go a bit more smoothly.
Getting Married
When you decide to get married, there will inevitably be a substantial amount of planning involved between making a guest list, choosing a venue, preparing for a shower or engagement party, and filing the necessary paperwork. With all of the prep work involved in anticipation of your big day, remember not to overlook long-term plans with your future spouse to protect your financial future together. Deciding to tie the knot is not only an emotional commitment, but a financial commitment as well. You and your partner will potentially be combining assets, salaries, and debts alike, so finding a way to have a solid financial plan lays a good foundation for your future together.
If you and your partner will be paying for some or all of the costs associated with the wedding, it is important to set a budget and expectations early on in the planning process to ensure that you are making decisions to have the time of your life on your big day without financially overextending yourself. The average cost of a wedding is $33,900 (but can vary from state to state), so set aside ample time with your partner to discuss areas that are important to include on your big day and where you might be able to find ways to save.
Purchasing a Home
Taking the initiative to start the home buying process is an exciting time, but remember, this puts you on the path to making one of the biggest purchases of your life. When you decide to start searching for a home, you will first have to go through an approval process with a bank to set some guidelines about how much to spend on your future home. One of the biggest barriers during the approval process is ensuring that your debt-to-income ratio (the amount of debt from your monthly obligations compared to your gross monthly income) isn’t too high.
An obvious way to ensure that you have a smooth approval process is by paying off your debt. This can help by increasing your total loan approval amount and sometimes even decrease your interest percentage. While paying off debt isn’t always the easiest task, there are certain strategies that might make this a bit less challenging. For example, some experts suggest paying off debts that have the highest amount of interest first because you will save more money in the long-run by eliminating credit cards or loans that are accumulating unnecessary interest.
This not only puts you in a better position as a buyer but a better financial situation overall because paying the minimum amount on debts such as high-interest credit cards is essentially like being up the river without a paddle. While homeownership is certainly a great way to build wealth, remember not to rush the occasion and ensure that you are financially stable enough to be able to not only make monthly mortgage payments but also afford the additional costs associated with repairs, general maintenance, potentially higher utility bills, and lawn care.
Becoming a New Parent
Becoming a new parent is one of the most exciting milestones that life can bring. In the months leading up to the moment that you meet your new bundle of joy, you will likely be planning how your new life will be as a parent. Whether this is figuring out child-care duties, determining where you want to receive prenatal care, planning the nursery theme, or picking out car seats and strollers, you will have plenty of tasks to complete before meeting your new addition. Remember that while you might be caught up in the excitement of all of these new changes, finding ways to also plan ahead long-term is important for the security of your family.
You can protect your family’s future by finding ways to ensure that they have financial security, even in unexpected events. For example, securing a life insurance policy is something important to do before the baby comes as you will most likely have your hands full afterward. A good option for new parents is to find a policy that can provide protection for a given period of time. This type of coverage is usually much less expensive each month than a whole life policy and you can determine a set amount of time to be covered for based on how long you would need your child or children to be protected. While a life insurance policy can’t provide emotional support in the event of an unanticipated loss, it can certainly provide financial protection for your loved ones, making this an important task to complete before becoming a new parent.
Planning for Retirement
While retirement might seem like a long way off, it is still a milestone that you will need to plan for ahead of time. The average cost of retirement is around $45,700 per year, so starting to save earlier than later will be extremely beneficial in the long run. Depending on where you are in your career, you might be offered a 401K through your company where you can allocate a portion of your salary towards your retirement account.
This is usually the most convenient way to save, especially if your organization offers a company match as this is essentially free money each pay period toward your retirement goals. Additionally, some companies even have the option of investing your contributions into mutual funds. Depending on the level of risk that you’re comfortable with, this could be an option if you are looking to build your retirement wealth more quickly. Make sure to check with your human resources department to ensure you are maximizing your contributions.
The personal milestones that life presents can make for an exciting time, however, it is important to remember that sometimes financial planning is needed to achieve these events. You can be better prepared for these events by budgeting, paying down debt, being diligent about having a savings account, and promoting your financial stability in the future. By taking these initiatives, you will be financially prepared for each new chapter of your life.
