Recently I was contacted by Jackie who shared with us that her husband’s mom had passed away, and as they went through the probate process, she began to feel like her husband and she hadn’t done enough to plan for the future.
She further shared, “Sure, we have a retirement plan and a will. But I worried that we hadn’t done enough to ensure our child on the autism spectrum would have a caregiver into adulthood. I realized I wasn’t clear on whether our home could be passed on to our children if something were to happen to us. And these concerns spun into others.”
So, she did tons of research, and with every new thing she learned, she began to feel better. Here is the piece she wrote for us to help bring more awareness to proper financial planning. Thank you Jackie for your insight.
It’s a tough subject to tackle, but I hope hearing about it from someone who until just recently felt equally overwhelmed will be helpful to those who just don’t know quite where to start.
“Financial planning” sounds a lot scarier and more complicated than it actually is—and in fact, putting it off could ultimately land you in an even more frightening and complicated situation. The sooner you get organized and prepared for the future, the better. Here are a few tips to get you started:
Establish Your Goals
It’s true that you can’t predict everything the future will bring, but you can start planning for the things you hope will happen. Sit down (with your spouse, if you have one) and lay out your goals and a tentative life plan. Perhaps you’re hoping to move up in your company within the next five years, or you hope to move to a new city as soon as it’s feasible. If you have children, consider how much you’ll need to put aside for their college education. For children with special needs, account for any home modifications they’ll need: both in the near-future and far. You should also include vacations you want to take or family events you’ll need to travel for like weddings and reunions.
Account for the Unexpected
Cars break down. Natural disasters strike. Illness and disease occur without warning. The fact is, there are a lot of variables in life, and it’s important to consider odds you might be up against. If you have an older home, it may need updates to ensure it’s a place where you can age in place safely and comfortably. Or if Alzheimer’s runs in your partner’s family, you’ll want to be sure you have funds set aside to cover the care they may need in the future. Even if your worries turn out to be wrong, it’s better to account for them in case they’re right.
Think about your own circumstances, as well. What would happen to your family if you passed away suddenly? Would they have a financial cushion? What would happen to your property? In addition to a will, some states offer a special kind of deed that automatically transfers control of your property upon your death. If you’re a single parent, this can be especially important because it can allow you to ensure your child will have a home should anything happen to you. Be sure to go through all your options of what’s available and legally sound in your area, and choose what’s best for your family’s needs.
Set and Stick to a Budget
You might be a pro at handling money without a set financial plan, but a budget allows you to actually look at how much you’re spending on what and where you should shift priorities. For instance, if your family eats out twice a week, sitting down and evaluating that total monthly cost is nearly identical to what you should be putting into your retirement fund. Once you’ve established how your money should be handled, make the commitment to stick to your budget each and every month. Don’t let yourself skip putting money in savings because of an unanticipated large purchase—perhaps you had to replace your vacuum this month, for example—and instead always make your contributions for the future a priority. Only pull from savings for emergencies and designated goals.
Check In and Reevaluate Your Budget Often
Though it’s important to stick to your budget as much as possible, that isn’t to say that you should never change it. Your needs and situation will change multiple times throughout your life, as well as your goals and needs for the future. Evaluate your budget quarterly, if not monthly, and assess how you’re doing on making progress toward your goals. If you get a promotion and begin making a higher salary, plan carefully for how you’ll spend your extra money each month. Perhaps you’re no longer interested in relocating your family, or you’re looking to enroll your child in a more academically-challenging private school. Talk to your partner about any changes you think should be made in your budget, and make sure the decision is one you are both comfortable with.
Don’t put off planning for the future. Keep these tips in mind for your financial planning and never forget: it’s better to be safe than sorry!