Financial Planning for Significant Life Events

We all experience at least a few surprise events sprung upon us throughout our lives and other significant expenses that we come to expect. Although some of these occurrences are unfortunate (job layoff, recession, loss of a relative), many of them can be positive (wedding proposal, funding college, having a child, retirement). Regardless of what happens and when, the power of financial planning lies in its capability to prepare your finances for any significant life event, whether you’ve anticipated it or not.

Everyone can benefit from a comprehensive financial plan because it allows you to:

  Better organize your spending.
  Pay down outstanding debt.
  Build toward long-term goals.
  Set your family up for success.
  Decrease anxiety about affordability.
  Develop an investment portfolio.
  Jump-start your savings.
  Create confidence in your money habits.
  Chart a path forward in times of uncertainty.

A strong financial plan can give you a blueprint not only for building wealth and saving for the future, but also for weathering the storm when income changes or rising expenses may impact your financial health. Despite what you may have heard, creating a financial blueprint isn’t reserved for the well-to-do or wealthy—everyone should have these plans in place. The structure itself will certainly look different for each individual household, but it’s essential for maintaining financial stability in the long run.

If you’ve never set up a financial plan before, you might be surprised by how comprehensive this planning process can be—especially when accounting for specific goals you might have and potential scenarios you might face in the future. The planning process can include:

  Budgeting & Saving

The ability to budget and save is crucial to any financial plan regardless of your income level. The financial planning process will provide a structured process for evaluating your monthly expenses, setting per-category spending limits, prioritizing monthly savings into savings accounts and/or other retirement and investment vehicles, and making sure these budgeted amounts fit within your net monthly income.

  Family Planning

Do you plan to have children in the future? Perhaps you’re looking to grow your family in the future. Financial planning can help you account for upcoming expenses, which may range from diapers to childcare to college tuition. You may use a financial plan to set up and fund a 529 college savings plan, a dependent care flexible spending account, or other financial tools designed to support new, current, and soon-to-be parents.

  Wealth-Building Strategies

This planning process goes beyond basic savings and the creation of an emergency fund and considers how you will grow your wealth over time. Depending on your income and financial goals, this can include investments into the stock market, real estate, and/or low-risk, low-yield products—such as certificates of deposit and money market accounts—to grow your assets and your net wealth over time.

  Retirement Planning

The earlier you start planning for retirement, the better prepared you’ll be. Regardless of your current age, retirement planning can help you identify a target retirement age and ideal post-retirement lifestyle, which, in turn, will help you determine how much income you will need to fund that retirement. 

From there, financial planning helps determine what types of retirement savings vehicles will be most helpful for reaching these goals. This can include contributions to a 401(k) offered through your employer and contributions to Roth IRAs and other individual retirement accounts.

  Career & Lifestyle Goals

Are you undergoing or considering a career change? Going back to school or planning a wedding? Maybe you want to stay at home with your kids while they’re young, then return to the workforce once they enter school. These plans come with other lifestyle choices to consider: What priority do you want to give to vacations? Do you aspire to one day buy a boat or a second home? What kinds of activities and forms of entertainment do you enjoy, and how much do they cost on average per month? 

These are important questions that affect not only how much income you need to generate but also how much you need to save for the future. You should also factor your desired quality of life into any calculations regarding your financial planning.

 Other Financial Considerations

Do you envision a future in which you scale back to part-time employment? Maybe you dream of starting your own small business someday or traveling the globe. Financial planning can help you turn those future desires into tangible goals that you can start building toward today.

Even if you end up developing a financial plan with a trusted expert, you should still focus on steps you can take to better manage your own finances on a day-to-day basis. Smarter spending habits and an emphasis on saving can help you lower your living expenses and create more opportunities to save.

1. Create a comprehensive household budget—and revisit it regularly.

Break down your spending limits by category. Money management tools, including mobile apps and tools that integrate with your bank’s checking account, can help you set limits and track spending month to month. As you start to track and monitor your habits, you might be surprised by what you learn.

2. If possible, set up and consistently contribute to an emergency fund.

Experts recommend that consumers save anywhere from 3-6 months of living expenses in an emergency fund. If you’re just starting out, don’t stress about the savings task ahead of you—just try to put away a little extra money from each paycheck, building up a financial buffer to cover unexpected costs.

3. Find out if your employer offers benefits packages that can help.

Many employers offer 401(k) matching, which is essentially free money. If you make a contribution to the 401(k), your employer will offer to match those contributions up to a set limit. These contributions are in addition to your base income, so do everything you can to maximize this benefit and boost your retirement savings.

4. Automate your financial obligations, particularly savings.

If you’re new to saving, making it a habit to contribute regularly can be difficult—especially if you’re easily tempted to spend money elsewhere. Automatic contributions take the decision-making out of your saving efforts, turning these contributions into another bill that is paid from your bank account every month.

5. Keep a close eye on automatic payments, such as subscriptions.

Subscription models are all the rage in today’s economy, and businesses love them because they offer guaranteed revenue even when customers don’t use those services. Review your subscriptions and make cuts to services where you aren’t getting your money’s worth.

6. Explore side gigs, investments, and ways to earn passive income.

If your current income isn’t enough to support your financial needs—including your monthly expenses, savings goals, or retirement investing—a side gig can be a flexible source of income that offers a short-term financial boost. This can be particularly valuable when working to pay off debt or build up your emergency fund.

7. Do your best to avoid debts and loans, and prioritize repayment.

Debt can create a drag on any financial progress you’re trying to make. Although it is tempting to prioritize saving to keep more money in your pocket, repaying debt can actually offer the greatest long-term value—especially if that debt carries a high interest rate, as is the case with most credit card debt and personal loans.

8. Monitor your credit score and seize opportunities to strengthen your report.

First things first: Check for any errors that need to be contested and corrected. Then, consider where your credit report has room for improvement. Is your debt utilization too high? Have you made too many credit inquiries in the past two years or missed bill payments? Free tools, such as Credit Karma, offer free credit score tracking and insights into your credit report.

9. Leverage financial calculators and other tools to plan out your goals and monitor progress.

How long will it take you to save for a down payment for a home? What about saving for retirement? Numerous easy-to-use online tools exist to help you evaluate your future financial needs and lay out a simple plan to reach those goals on your desired timeline. Plus, missed payments can rack up fees and interest. Use a financial calendar to track all of this spending, and make sure you’re sticking to your savings plan.

10. Get professional guidance if needed.

Nobody can predict the future—not even a trusted financial planner. However, having a reliable partner throughout the financial planning process can help you account for scenarios that could arise in the future. These life events could include a change of income or marital status, inheritance or insurance payouts, medical expenses, or other events that change your financial outlook. A strong plan and a dependable advisor can help you anticipate these scenarios and give you the financial flexibility to make adjustments on the fly. 

Contact FSCB today to find out what kind of financial planning services your local bank offers.

During significant life events or times of uncertainty, you may be tempted to hold off on making plans for the future. However, one of the greatest benefits of financial planning is its ability to chart a path forward when your outlook is unclear. By understanding the practical steps you can take to strengthen your financial footing, proper planning means a higher likelihood of achieving your life goals, both now and in the years to come.

The strength of your financial plans lies in your ability to adequately budget for your lifestyle choices and how well you can effectively monitor that budget, including spending, saving, and investing habits. Tracking and managing these behaviors can give you more visibility into both the predictable and unpredictable expenses that may arise. Consistent self-discipline and remembering to stick to your long-term objectives can help build financial confidence and allow you to maintain financial stability throughout your life. 

If you’re still unsure where to begin, connect with a financial expert at FSCB to start planning today.

About FSCB

Whether you’re seeking a line of credit, personal loan, credit card transfer options, or financial counseling services to improve your money management, we’re committed to helping our customers set and reach their financial goals.

Since 1954, First State Community Bank has been a leading financial resource for residents and businesses across the state of Missouri. First State Community Bank has built its reputation on an unyielding commitment to delivering the best possible service to customers and partners, from the Junior Savers who open an account with $1 to those applying for multimillion-dollar commercial loans. We are here to help you reach your financial goals today and into the future. 

Learn more by connecting with the FSCB team to see how you can get started today.