Intentional Goal Setting to Help You Financially Prepare for Life’s Milestones

posted in: Money Blog

Life is filled with special moments and milestones meant to be celebrated and honored. Most of these milestones not only impact you on an emotional level, but a financial level as well. This is why it is important to be diligent about finding ways to plan for these events ahead of time. Whether you are getting married, having a baby, or starting a new job, it is beneficial to set intentional goals to help you prepare for a financially stable future.

Getting Married

When you and your partner decide to take the plunge and tie the knot, you are making a long-term emotional and financial commitment. Money matters can be a significant factor in marriages because most individuals have different approaches to handling their personal finances. When you get married, your financial decisions have an impact on your partner so learning about each other’s money “habitudes” can open up important lines of communication that are needed once you are married.

Although there are more exciting topics to discuss when you’re planning a wedding such as deciding on a menu, reception venue, and floral arrangements, it is important to have conversations with your partner about how you both plan to handle financial barriers after saying, “I do.”

Whether or not you decide to combine funds with your future spouse, you will want to have a solid plan for how you will approach financial topics. While it is ideal to be in a secure financial position before getting engaged, sometimes that is not possible so being intentional about setting goals with your partner before getting married can put you in a better position after the big day.

Financial Goal:

Because personal finances and spending habits are complex and vary from person to person, it can be helpful to start out small by setting attainable goals at first to not get completely overwhelmed. One achievable goal to set with your partner is to have a plan of action when it comes to funding your wedding.

If you are planning on paying for all or some of your wedding, have a discussion with your partner about a budget that you both feel comfortable with. Find areas that you both don’t mind sacrificing such as printing your own invitations, having the open bar be limited to only wine and beer, or having an off-season wedding. If there are certain splurge items that you and your partner don’t want to sacrifice for the celebration, look for ways to budget and save for these items together. Having an open dialogue about monetary considerations with your partner early on sets you up for a more stable financial future together.

Having a Baby 

One of life’s most special milestones is the moment you become a parent. Bringing a baby into the world brings both emotional and financial changes so preparing for this moment ahead of time can help alleviate some stress you may have in anticipation for this major event. As you are probably aware, there are many costs associated with becoming a parent— both in terms of the actual cost of child raising as well as the secondary costs such as potential changes in employment status for one of both parents. One of the most significant costs associated with becoming a parent is funding childcare. It is estimated that the cost of infant care is around $15,000 per year, which is why it is worthwhile to find ways to monetarily plan ahead.

Financial Goal:

When financially preparing to become a parent, remember to consider the fact that your new addition will need some kind of financial protection if an unforeseen circumstance were to arise. For example, if you or your partner are planning on taking time off from your career to help with childcare, you will want to account for how that care would continue to be paid for if you were unable to do so. This is why it is crucial to set a goal to start looking for life insurance policies that meet your family’s needs before bringing home your new bundle.

Life insurance acts as an income replacement if you were to unexpectedly pass away, providing a much needed safety net to dependents and other family members that depend on you. It is important to note that even if you decide to transition into a stay-at-home parent role, you should still look into some kind of policy because there is a monetary value that can be put on your time and if you weren’t there to be able to provide that care, life insurance coverage could provide a much needed cushion.

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If your starting a family,
you may want to check out this article at Direct Line Magazine…

A Guide to Family Financial Planning
By Paul Horsman
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Becoming a Homeowner

Deciding to purchase a home is a long-term financial commitment that requires a considerable amount of planning and preparation. Because purchasing a home is most likely going to be one of the largest purchases of your life, you will want to be intentional about the goals you set to help you achieve this milestone. Becoming a homeowner comes with a new set of responsibilities and items to check off of your to-do list before you can actually close on your new home. This is why it is beneficial to set goals that help you find the home of your dreams while also allowing you to set yourself up for a financially stable and responsible future as a new homeowner.

Financial Goal:

If you are in the early stages of becoming a homeowner, you will have different goals to set than someone who is already in the trenches of the process. For those who are just starting their journey, a major financial goal to set is to pay off as much credit card debt as possible before getting an approval from the bank. Even though there are some programs that might allow you to purchase a home despite having credit card debt, it is important to question whether or not this is the best long-term financial decision.

Owning a home will come with added costs such as higher utility bills, general maintenance, and repairs, and even the cost to furnish additional spaces in your new residence. While paying minimum monthly payments on a credit card can keep your account in good standing, it can financially feel like you’re digging a hole just to fill it back up again. This is because not only do credit cards have high monthly interest fees with a low suggested minimum payments, but the interest is compounded so you are essentially paying interest on top interest. This is why paying off high-interest credit card debt might be a wise choice before using any additional funds you may have towards the purchase of a home.

Starting a New Job

Whether you are starting your first job, re-entering the workforce after an extended time away, shifting careers, or switching companies, starting a new job is always an exciting (and sometimes nerve-wracking) time. Finding a different job can give you a new perspective and an opportunity to make leaps and bounds in your career that may not have been possible before. While this is a good time to set goals regarding your new job, it can also be helpful to set financial goals and expectations for yourself for a fresh start moving forward. 

Financial Goal:

An important financial goal to set during this time period is to take some time to reevaluate your budget. Depending on the career move you are making, you could be moving into a position with a higher salary. When you are making more money, it can be easy to fall into the habit of spending the additional funds that you are making. This is why it can be helpful to start budgeting your updated paycheck soon after you start in your new position. For example, if you are planning on making a large purchase in the near future, try to be diligent about setting aside the additional funds in a savings account to finance this purchase.

When you receive your first paycheck from your new job, consider saving half of your income from the get-go. Immediately investing or setting aside these extra funds can help you quickly multiply your savings, without having to change your lifestyle. Additionally, consider what you were spending on benefits before as well as the cost of the benefits that you are interested in securing at your new company. For example, if your new job has lower healthcare premiums but you are buying into a long-term or short-term disability plan, you will want to account for this in your new budget.

Retirement Planning

While retirement might not be a milestone in your immediate future, it is important to keep this event in the back of your mind as you progress in your career. While it can vary state to state, the average cost of retirement is around $50,000 per year. This means that to exit from your career comfortably, you are going to need to plan for this event earlier than later while you are working. Because there can be many different strategies and ways to plan for retirement, it can be helpful to do some research and become more financially literate to help you reach your future personal and financial goals.

Financial Goal:

One of the best ways to save for retirement is by contributing to an employer-sponsored 401K. This is because you can allocate funds directly from your paycheck to the account before taxes are removed, making this a convenient way to contribute. One goal to set that can help prepare you for retirement is to either open up an account or consider increasing your contribution percentage. Additionally, if your workplace offers a company match, it is important to take advantage of this because it is essentially free money towards your future. If you get a promotion or a raise, be diligent about increasing your contributions by a percent or two each time so that you can build wealth more rapidly.

Depending on the stage you are in your life, you might be preparing for different milestones now than you were one to five years ago. Finding ways to plan ahead for these events can help you reach your personal and financial goals, while alleviating any unwanted stress involved. No matter what event you are preparing for, remember that financial planning and goal setting is a continuously evolving process that takes time and effort but is worth the investment by setting you up for long-term stability and success.