How to Financially Plan for Major Life Milestones

A lot of major milestones in life directly affect your finances, so it makes sense to consider them in the financial decisions you make. Whether you are starting a new job or getting married, it’s vital that you understand their impact on your finances and make sure that you are prepared for them. This article will help you to plan financially for when these major life events happen.
 

Milestone #1 – Getting out of Debt

Below are some of the best ways to plan your finances to get out of debt quickly and successfully.

• Pay Down Credit Card
  There are two common ways to pay down your credit card debt – debt snowball and debt avalanche. With the debt snowball, you can start paying off the one with the lowest balance out of your credit card debts. It will help you get out of small debt quickly. The debt avalanche is the opposite, focusing on paying the one with the highest interest rate to save more money in the long run.

• Pay Down Student Loans
  The debt snowball is also an excellent way to pay down your student loans. But one of the best strategies is to pay more than the minimum monthly payment. If you make extra payments, you can pay down the principal at a quicker pace. However, do make sure to tell the student loan service company that you want the extra payment to go to the principal of your balance.

• Other Tips and Advice to Pay Off Debt
  Besides those mentioned above, some of the best tips to help you quickly get out of debt include:
• ◦ Refinance all your student loans into one, which enables you to save a lot more money in terms of interest rates
  ◦ Enroll in Autopay, which may come with discounts on interest rates while also making it easy to stay on track of your payments
  ◦ Start making payments while you’re still in school and the loans aren’t unsubsidized yet, so the loan interest is kept at bay
  ◦ Earn money on the side to start paying off your credit card debt, student loans, and other debts
  ◦ Throw any “found” cash, i.e., tax refund, Christmas bonuses, etc., that you have towards paying off your debts
  ◦ Ask your boss for help paying off your debts by negotiating your salary or benefits to get out of debt quicker than doing it on your own
  ◦ Live well within your means, budgeting your money as tightly as possible and managing to get by with only necessities until you are debt-free.

Milestone #2 – Build Your Savings

Do you want to start building savings? You can try the following tips to save more money:

• Budgeting
  First, you must get an idea of what and how much you spend in a month. After that, you will be able to organize your expenses in a budget. When making a budget, make sure it outlines how your expenses compare to your income. That way, you can plan how you spend your money, ensuring that you don’t overspend.
• Emergency Fund
  By creating an emergency fund, you have a financial safety net in cases of unexpected expenses. You never know what might happen in the future – you could lose your job or might have an accident. It’s going to be extremely stressful and costly when that happens. With a stash of money on the side, you can lessen the burden from these unexpected expenses.
• Personal Savings
  Opening a personal savings account helps you save money on the side and earn some without effort at all. It’s all thanks to the interest rate that comes with your account. Depending on the bank where you opened a personal savings account, you may earn a 1% – 2% interest a year. With this, you will have more money when you need some.
• Other Ways to Save Money
• ◦ Cut down on your groceries, especially the junk foods
  ◦ Cancel automatic memberships and subscriptions you’re not using regularly
  ◦ Stop using branded items and settle for generic ones
  ◦ Cut your cable subscription and use other alternatives instead
  ◦ Set it so that you save money automatically
  ◦ Pay only in cash and take advantage of discounts
  ◦ Reduce your energy costs by tweaking things at home

Start saving today with GuardianWealth
 

Milestone #3 – Buying a House

If you plan on buying a house, these tips can help plan your finances to make your dream come true:

• Ensure You Have a Good Credit Score
  Good credit is crucial in buying a house. Why? Because lenders use your credit score as a sign of your creditworthiness. Will you be able to handle the financial responsibility of paying for such a large purchase? Your credit score makes the biggest difference in your mortgage getting approved or turned down. It will help you get the best mortgage rates and interest rates as well.

Now that you know how important good credit is, make sure to check your score sooner rather than later. That way, you may still have time to take care of it and boost it before you start the homebuying process. Even though it takes a few weeks to get your mortgage pre-approved, it’s always best to work on your credit score long before that.

• Other Tips to Help Buy a House
• ◦ Save money now because you’ll need it to buy a house and prove to your lender that you can afford your housing payments
  ◦ Earn extra cash, i.e., sell some stuff or do a part-time job, to increase your income
  ◦ Find out more about down payment assistance programs
  ◦ Hold off on applying for other loans that can increase your monthly debt payments
  ◦ Utilize low-interest credit card or line of credit for home maintenance and other related purchases

Start saving toward purchasing a house with GuardianWealth.
 

Milestone #4 – Starting a Family

Starting a family is a huge milestone in life that has a significant impact on your finances. Therefore, planning it properly is a must.

• Financial Plan for Young Couples Planning a Wedding
  Start by expanding both of your emergency funds, so you will have more money to spare for the wedding. The couple can also start a wedding fund before the actual nuptials, ensuring you don’t incur debt just before getting married. After discussing the finances – the venue, catering, wedding dress, menu, etc. – plan a budget.

You’ll need to set a limit for the budget and adjust your wedding plans based on what you can afford. Sharing expenses also help in working on a budget for the wedding. You can split the bill in half or take separate payments on your wedding bills. Either way, it’s essential to have open and honest communication whenever you are discussing
money.

• Financial Plan for Milestones in Building a Family
  Pregnancy and childcare are both costly, so it’s not a great idea to go at it without planning. Below are some tips on how you can financially prepare for significant milestones in building a family.
• ◦ Having a Child

You have at least three things to prepare for the coming of your baby. One, estimate the medical or other costs this process will incur. Two, you need to plan your parental leave from your job. Three, you need to make a budget for the newest addition to your family.

In terms of the medical costs, know that it will be expensive even if you have health insurance. As early as when you heard the news, check out your expected charges. It will include prenatal care, labor and delivery, and of course, the bills after. Also, if you are considering adoption or IVF, you may need to add or remove some expense line items.

You will undoubtedly have to take leave when you bring a baby into your family. It’s crucial to find out how much time you can be on vacation or take parental leave and if it’s going to be paid. You can get an accurate picture of this by checking your company’s policies and the state’s laws.

You should also account for every subsequent expense, from the diapers to the stroller. It’s crucial that you understand how much it will affect the family’s entire budget to allocate for it adequately.

• ◦ Childcare and Children’s Education

When it comes to financial planning for your children, it’s not only about ensuring you have enough funds to take care of their needs. It’s about teaching them to be wise with money as young as they are. On that note, you can begin by living frugally and stashing some money for their education right after birth.

First, you need to set your priorities straight and plan your budget according to the entire family’s needs. After taking care of that and setting aside money for savings, save a small amount of money for your children’s college fund. Doing so as early as you can ensure you can transfer a good amount of wealth that they can use to pursue their dreams.

Start saving for your child today with GuardianWealth.
 

Milestone #5 – Growing Your Wealth

So, you want to grow your wealth. How do you do that? By careful financial planning, of course.

• Focus on Being Financially Secure (Financial Security)
  The first step to growing your wealth is to achieve financial security. That means no debt, which also means working on paying off anything you owe. It will help a lot if you take the advice mentioned above on how to become debt-free. Besides getting out of debt, saving and investing are two things you can do to become financially stable.
• Invest in the Stock Market Through Robo-Advisory, NOT Stock Picking
  Investing in the stock market is a good way of earning money on the side. But it’s risky for beginners to do this. This is why it’s not a good idea for you to pick stocks. You’ll probably be bad at choosing them, chasing after the shiny and new stocks you see. Instead of stock picking, it’s better to utilize a robo-advisor instead.

Robo-advisors can provide an algorithm-driven and automated financial planning service that doesn’t need a lot of supervision. By collecting information about your financial situation and goals, they will use the data to advise you and automatically invest your assets. With its diversified portfolios as well, Robo-advisors can maximize your opportunity to earn money through investing.

• Adopt a Long-Term Mindset and Keep Regular Savings
  One of the essential tips to grow your money is to plan for the long-term. It’s not about saving money to use next month, but for the coming years. For instance, you may plan to grow your wealth for a comfortable retirement. Or, it can be to transfer them to your children. Having long-term goals is essential, but most importantly, you want to keep saving regularly.

Start growing your wealth today with GuardianWealth.
 

Milestone #6 – Saving for Retirement

Getting older is not easy. In anticipation of that, you must financially plan for retirement. Now, there are various ways you can have a financially secure retirement.

• IRAs
  The IRA or Individual Retirement Plan is an account that can help you save for retirement on a tax-deferred basis or with tax-free growth. It’s one of the best tools for saving, with three different types that each has an advantage.
• ◦ Traditional IRA – By contributing money you’re able to deduct from your tax return, you can save and earn some tax-deferred money until withdrawing them in your retirement
  ◦ Roth IRA – Your contributions are money that you get after-tax, which can grow tax-free and may include tax-free withdrawals after meeting some conditions
  ◦ Rollover IRA – This involves money that rolled over from your qualified retirement plan, moving eligible assets to include in traditional IRA
• Passive Income Investments
  Passive income is income that requires little to no effort to earn and maintain. It’s about having cash-producing assets that earn your income even while you sleep. Examples of these are rental properties, renting your car, monetizing your social media page and investing in stocks. You can start building a passive income portfolio today by investing in dividend-yielding stocks and bonds. These pay regular dividends and/or interests and is a great example of earning money with little to no effort. You can start creating a passive income portfolio with the GuardianWealth wealth management app

Conclusion

There are so many things that can happen in a person’s life. It’s hard to account for all of them financially. But by making sure you’ve saved enough and prepared enough for the major life events, you can minimize the stress and frustrations they come with. Thanks to financial planning, there is no need for you to live paycheck to paycheck your whole life.