Would you find out where all the bumps in the road are and map out a new route to avoid them? We certainly know what our answer would be. And although we may not be able to predict the future (sorry!), we can say with certain clarity that there are challenges many of us will face at one stage or another, be it expected things like raising children, or unexpected events like redundancy. When your life changes, so do your finances. With just a little financial planning you can start to feel more in control of your money, prepared for any eventuality and confident to keep moving forward!
That’s why we’ve compiled a list of some of the major life events and the initial things to take into consideration…
Going to college or university involves considerable costs, especially if you decide to study away from home. It is important to consider both living and tuition costs. For further tips and advice on higher education, download our free Student MoneyManual.
Setting up your first home. Whether you are renting or buying, careful organisation and forward planning will help minimise the stress. Start thinking past the initial deposit to the practicalities; one- off considerations include furniture – where are you going to sleep, store your clothes and household goods? What are you going to eat off? How are you going to cover ongoing expenses such as Council Tax, your TV licence, electricity and water bills?
Starting a family can be a wonderful life-changing event, which makes it very easy to get caught up in the excitement of the new arrival. But remember, incomes are likely to go down and expenses go up – so without a proper plan in place it could easily end in tears (and, not just the baby’s). Again it might be helpful to identify both one-off and ongoing costs, and see if friends and family can offer help.
More and more, unfortunately redundancy is becoming a fact of life. Even if you receive a redundancy payment, your income is likely to fall quickly. You will need to consider the payment of bills, and the cost of everyday living until you get back into work. If you are worried about potential cuts, now is the best time to start taking control of your finances; finding ways to cut back on spending and managing existing debts. You might also want to consider taking out insurance – but be aware that you will not be able to obtain a policy if redundancy consultations have already started, even if you are not personally affected.
Another unexpected life turn, which can have serious financial implications, is long-term injury or sickness, again your income is likely to drop dramatically. Nobody can predict every eventuality but if your employer offers long-term sickness protection, it is usually a good idea to sign up just in case. If not, you can insure against these events yourself, but always make sure you understand the T&Cs and that the policy works for your particular circumstances.
Separation and divorce can be a very turbulent time, and so money issues may be the least of your worries, but in order to protect yourself and your loved ones you need to start considering the practicalities that go along with it. How will you live on one income? How will you cover the costs of setting up and running two new homes between you? How will you support your children? What happens to the house, and your debts?
Bereavement is a fateful circumstance that unfortunately most people will experience at least once in their life. Things to consider include who will take control of the family finances? How will you cover funeral expenses? Do you have access to all the legal documents, including insurance policies and wills? If you are reliant on a partner’s income to support you and/or your children, do you have the appropriate life assurance and death benefits in place to protect your family should the worst happen?
Retirement can have huge lifestyle, financial and practical implications. When you retire you give up the regular income from your job and it is replaced with a state pension, and for some people, a personal or occupational pension. To avoid financial struggles throughout your old age, you need to start a pension as early as possible, and keep a close eye on whether it will provide you with sufficient income in retirement.
Last, but certainly not least, it is important to start thinking about a will. As daunting as this may seem, everyone needs to make one in order to protect the people and things that they love.
We’ve only scratched the service here, so for further information on money management at each of these life stages we recommend visiting the Money Advice Service.