There are some key times in life where finances can get a bit more complicated. You may be sailing along, sticking to your investment or saving plans, but then something major happens and suddenly you need to think about money in a more active way. Sometimes these life events are things that you can count on happening and look forward to, like a child starting college or retirement. Other life events are not so easily anticipated. These might include the death of a family member or the need for unanticipated medical care.
At Vector Financial Solutions, we believe that good financial planning helps you understand how these kinds of life events might impact your finances. It helps you prepare for both the best and the worst so that when these things inevitably happen you can rest assured that financially at least you are as organized as you can be.
Big life changes are never easy, but they’re even more difficult when you’re sidetracked by financial hardship.
How can good financial planning support me as I start a family?
If you are just starting a family you probably have many questions about your finances. You might even be feeling a considerable amount of stress around the subject of money. In many ways this is good and normal. It shows that you are serious about creating a secure financial foundation for your kids and spouse. Still, it’s uncomfortable not to know what the financial future holds when there are people depending on you. This is where a certified financial planner can help.
1. Will I have enough money to cover all of these new baby expenses?
A certified financial planner can assist you as you create a budget and financial plan that works for your family. A good financial planner understands the new expenses you’ll be facing, from diapers to preschool costs. They will help you make sure your budget reflects reality and that you haven’t left anything out. They may even have some ideas for how best to anticipate and save for what’s coming. This can help you to meets these higher costs without seeing your long-term financial plans falter.
2. What do I do about debt now that I’ve started a family?
There’s something about having a new baby that makes people start to look at their debt problem closely for the first time. Often, however, it’s hard to get a clear picture. Many people aren’t sure how to go about paying off debt in the most efficient way. They also aren’t clear on when they can expect to be debt free or how their debt will affect things like saving for college.
A good financial planner can help you create a schedule for paying off your debt and understand the cheapest way to go about it. They will be able help you recognize which debts to prioritize and which you might be able to leave standing for a while. Most importantly, they can help you simplify the problem.
3. Do I need a life insurance policy now?
Many people buy their first insurance policy right before or after their first child is born. Often one spouse will be cutting down on their work outside the home and the couple will rely more heavily on one person’s income. There is suddenly a lot riding on one person in regard to generating income and a life insurance policy often feels like a natural step.
The thing that many people don’t understand about life insurance, however, is that there are many different kinds of life insurance policies and not all of them will be appropriate given your family’s situation. Often people also don’t know how much life insurance they need. A good financial planner can help you understand your options and find a life insurance policy that is structured to fit your needs.
How can good financial planning support me with college saving?
Everyone knows that college costs are rising all the time. Given this, it’s not surprising that most parents are anxious about how they are going to cover their children’s college education. While it is true that paying for college is often a big financial hurdle, there are many ways that this situation can be made easier.
Having a certified financial planner on your team will help you understand how college saving will affect your finances in a big picture way. They will help you create a financial plan and understand how much you need to save. They will discuss the benefits and drawbacks of 529 plans, Coverdells, and other college savings accounts and they’ll help you get an idea of how saving for higher education will affect your retirement plans.
“The bottom line is that college education is a huge cost, but it’s one that can often be met with proper planning.”
How can good financial planning support me through my divorce?
One life event that almost no one anticipates is a divorce. This makes divorce an especially hard thing to deal with financially. A good financial planner can help you simplify the financial aspect so that you can get back to the business of healing and starting your new life.
Often people going through divorce work with both divorce attorneys and special financial planners called Certified Divorce Financial Analysts or CDFAs. It is often a good idea to meets with a CDFA before you speak to the attorneys.
“A CDFA will help you create a list of assets that you share with your spouse and a budget for your life after the split. With these two things in hand you can go into your meeting with the divorce attorney prepared to ask for what you need and with an understanding of how the divorce financial process works. This means a more efficient meeting which translates to you paying less in hourly attorney fees.”
A good CDFA can also help you avoid costly mistakes as you navigate the process of splitting your assets with your spouse. They’ll help you make sure, for instance, that you aren’t charged unnecessary early withdrawal fees when splitting accounts retirement accounts.
A few of us here at Vector Financial Solutions have gone through divorces of our own. We know this process is hard no matter which way you look at it. We also believe, however, that the financial part can be made easier with a little bit of expert help.
How can good financial planning support me through the loss of a loved one?
Losing a loved one is one of the most difficult experiences in life. We can’t really ever be prepared for such a thing. Often it feels overwhelming to say the least. When going through grief, money is usually the last thing that people want to think about. Unfortunately, it has a way of demanding attention.
When someone passes there are often quite a few financial items that need attention. Family members will need to think about funeral costs, life insurance claims, and the financial implications of any inheritance money among others things. Though it is entirely possible to navigate these things on your own, many find it useful to have the support of a good financial planner.
“When you’re grieving we believe money shouldn’t be your top concern. A financial planner can take some of the pressure off of the situation and help you get back to the healing that needs to be done.”
How can good financial planning support me as I age?
It’s not fun to plan for the later part of your life, but it’s essential to do so. In many ways age is something we are lucky to deal with and preparing for what it will mean to your finances doesn’t need to be stressful. Really there are only a few key components to anticipating expenses that come with age and a good financial planner can help you get ahead of the game.
1. Is long-term care really necessary?
People like to make generalizations about long-term care such as nursing home stays, assisted living, and at home medical care. They’ll tell you that nobody ever needs those things or that everyone needs them and the costs are exorbitant.
“The truth is that no one has a crystal ball when it comes whether you’ll have high long-term care costs late in life. It doesn’t do any good to ask whether planning for long-term care is necessary. The more appropriate questions are how comfortable are you leaving your care up to your family should you become sick later in life and do you have enough money saved to cover your expenses in this situation.”
2. What’s the deal with long-term care insurance plans?
Long-term care insurance can be a good option for those who want to make sure that they are provided for later in life should they need long-term care. Often these people do not believe their family is in a position to provide for them if this happened or they don’t want to burden their family with the responsibility. These people are also often determined not to let the long-term care needs derail their financial situation.
Just like with life insurance, there are many different options when it comes to long-term care policies. There are also different schools of thought about how much long-term care insurance is necessary. Sometimes long-term care isn’t insurance isn’t appropriate at all. A good financial planner can help you understand how a long-term care insurance policy could fit into your big financial picture and whether it’s the right move for you and your family.
3. How do I make sure there’s something left over for my spouse and kids?
It’s important to many people to make sure t there is something left for their family after they pass away. Despite this desire, however, a surprising number of people do not sit down and create a detailed estate plan. While financial planners are not estate attorneys, they can help you understand your options for created an estate plan that provides the security you desire for your family.
Want to know what we can do for you?
It’s an unfortunate truth that the times in our lives when we most need to be paying attention to our money are the times in our lives when it is most difficult to do so.
“Starting a new family, saving for college, divorce, and planning for old age are challenging times even without the burden of financial stress. It precisely in these times, however, that financial mistakes are made.”
Why not schedule a call?
If you’re going through a major life event and are wondering how it will affect your finances, you might benefit from a call with us. We won’t charge you anything and we don’t require a further commitment from you. We’ll simply ask you some basic questions and help you see the big picture when it comes to your finances. If you want to continue on with us after that and let us help you through this transition, fantastic! If not, we’re happy to have helped you in even a small way on the path to your new life.
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David Wilson, writer at Financial Truths, is also a financial advisor and Certified CDFA® ® at Vector Financial Solutions, Inc. Vector Financial Solutions is located at 139 E. 3rd Ave., Escondido, CA 92025 and by phone at 760-741-3159. He serves clients throughout the U.S. as well as those in Escondido, San Marcos, Rancho Bernardo, Poway, 4s Ranch, Rancho and Santa Fe, California.