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Key Financial Planning Steps for Life’s Major Milestones

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As we go through life, we hit major milestones like getting married, having children, buying a home, retiring, and more. Each of these comes with key financial planning considerations to ensure you are setting yourself up for success during this new phase. Here are some top financial planning steps to take as you navigate life’s biggest moments.


Start Budgeting as a Lifestyle

One of the most fundamental yet critical things you can do is make budgeting a regular lifestyle. This means tracking your full financial picture every month at minimum, including income, and fixed and variable expenses. Make adjustments to align spending with your priorities and values. And plan ahead for both short and long-term goals.


Budgeting early on ensures you have excess cash flow over time. This gives you flexibility for major milestone expenses in the future. Rather than struggling to fund these big moments after the fact. Budgeting takes some time to build as a habit. But pays exponential dividends throughout your lifetime.


Getting Married

When you meet your future spouse, there are key financial considerations during this exciting time. First, have open and honest conversations about individual financial situations early on. This includes income, debts, assets, budgets, financial priorities, and goals for the future.


Next, discuss shared visions and goals for finances as a newly married couple. Such as home ownership plans, adding children eventually, retirement saving goals, and more. Ensure you’re aligned.


Some key financial steps when getting married include:


  • Update beneficiaries on retirement accounts and insurance policies
  • Make a plan to pay down individual debts
  • Begin discussing how you’ll merge finances or share expenses
  • Start budgeting for your new life together with combined expenses

For many couples, questions arise such as how do you apply for insurance when getting married if there is a change in work status. Meet with a financial advisor to ensure you take steps to protect both parties.


Having Children

Welcoming a new baby is an incredibly exciting milestone! While parenthood brings tremendous joy, a child also impacts finances significantly. Key steps when expecting include:


Buy What You Need

Be selective when purchasing baby items. Strollers, clothes, toys, and gadgets can skyrocket expenses. Create a minimalist baby registry focused on the essentials you’ll use most. Consider buying gently used items which often have little wear and tear. Utilize hand-me-downs from friends and family members.


Boost Emergency Savings

Aim to have at least 6 months of living expenses banked for maternity leave or unexpected costs. Going down to one income for some time means needing a stronger backup plan. Reduce discretionary spending in other areas to funnel more cash into savings buffers.


Review Insurance Needs

Add baby to health insurance within 30 days of birth to ensure medical care is covered. Also, consider boosting the life insurance coverage you may have through employers. This ensures your growing family is protected if the unthinkable occurs.


Buying a Home

For many people, home ownership signifies an important lifestyle shift towards stability. Key steps when preparing to buy include:


Increase Downpayment Funds

Most experts recommend a 20% downpayment to avoid private mortgage insurance and get better interest rates. Saves towards this over time through automatic savings contributions. Minimize non-essential costs in the 1-2 years pre-home purchase to funnel cash towards your downpayment funds more quickly.


Improve Credit Health

Your credit score and report history play a big role in the mortgage terms and interest rates available to you. Review reports from Equifax, TransUnion, and Experian. Ensure no errors are bringing your scores down. Keep credit card balances low, pay all bills on time, and avoid new credit checks from loan applications in the months just before applying for a mortgage.


Get Pre-Approved

Work with a lender to get pre-approved for a mortgage 3-6 months before buying. This allows you to enter negotiations from a position of confidence on a seller’s timeline. Pre-approvals confirm the loan amount you qualify for based on debt, income, and credit history.


Entering Retirement

As retirement nears, critical shifts occur from the accumulation to the distribution of assets. Key steps include:


Confirm Retirement Income Sources

What income will you have from Social Security benefits, pension plans, and retirement savings accounts like 401Ks and IRAs? Work with a financial advisor to project cash flow to ensure you have adequate income longevity based on current savings and rates of withdrawal over 30+ year timespans.


Downsize Large Expenses

With kids grown up and out of the house, right-size housing costs, transportation, entertainment, and dining out expenses. This stretches retirement dollars further. Pay off debts like mortgages and cars to minimize required monthly cash outlays.


Develop a Withdrawal Strategy

Create a withdrawal sequence to best optimize returns over decades based on portfolio structure across taxable, non-taxable, and Roth accounts. Set rules in place for rebalancing asset allocation and when to make adjustments to take some risk off the table in later years. Work closely with financial experts to implement strategies minimizing tax consequences and portfolio longevity risk.


The Big Picture

While each life moment brings unique financial planning needs, taking proactive control early on sets you up for success through every phase. Implement core habits like budgeting as a lifestyle, building emergency buffers, carefully managing debt, and optimizing savings rates. This gives you a greater ability to fund major milestones without reactive scrambling. With some foresight and expert guidance, you can craft a strategy allowing you to FAI (financial independence retire early) and enjoy life’s most precious moments!