While it is normal for your financial and investment needs to evolve as you grow older, there are many big life moments that you might not expect to impact your financial plans or lifestyle. Discover how to navigate seven life moments so you can celebrate instead of stress as you reach your goals.
Earning a college degree
The excitement of pursuing your educational goals is filled with an abundance of new knowledge, life experiences and a variety of costs. The costs associated with a degree from a four-year university include tuition, room and board, books, school supplies, meals, extracurricular clubs, organizations and more. According to a recent survey from U.S. News‡, the average tuition and fees for an in-state public college is more than $40,000 for four years. If you choose to continue with a postgraduate education, this will add several more years and expenses.
Student loans can have a lasting impact on your financial plan. Inquire about all your options and be sure you understand all the terms and payback conditions, so you can build the payment into your financial plan and budget.
It can also be helpful to research other funding sources to help you pay for college like scholarships, federal aid and grants. In addition, a 529 account is a savings vehicle that can be used for educational expenses. This is a great tool to use if you want to save for a family member’s or your own future education. A 529 isn’t just limited to university expenses; it can also be used for technical or trade schools.
If you are going back to school after taking some time to tend to other aspects of your life, it is necessary to assess your current financial picture and how this added expense could impact it. You can still save for retirement and reach other financial goals while paying for your higher education, you might just have to adjust your timelines. Your financial team can help you strategize ways to pay for college that fit within your lifestyle.
According to the Bureau of Labor Statistics‡, the average worker will have 12 different jobs during their career. This means you will likely change jobs several times throughout your decades-long career, which can have an impact on your financial plan. Your income is the basis of your financial plan, which will ebb and flow along with pay decreases and increases. If you go through a period of unemployment, you’ll want to have some savings to fall back on. If you get a pay raise when you change jobs, you’ll want to be mindful of keeping your spending in check.
If you own a business, your financial team can help you plan for the ebbs and flows of being your own boss. Lean on your team to be a resource for tips and tricks and business financial education.
Tying the knot
Whether you are 22 or 52, getting married or combining two households is a major life moment that has many financial commitments and expenses tied to it. To ensure your union does not break the bank, be mindful of the expenses that will add up as you plan for your big day. Couples can anticipate spending on average around $30,000‡ for both a ceremony and reception. It can be helpful to have an open conversation with family or friends who want to financially contribute to your wedding festivities. In addition, your financial team can help you create a realistic budget for this big expense.
When combining two households it is vital to discuss how you plan to manage your finances together, including spending and saving. Some couples may choose to combine every dollar, whereas others want certain accounts to remain separate. Ultimately, this decision is up to you and your partner but this is a discussion you should have before the wedding day. Your financial team can give you best practices to manage your funds together and help you combine your budgets and savings goals.
Making the big move
According to the Census Bureau‡, the average American can move 11 different times. With each move, there is the hassle of uprooting your routine and comfort and also the expense of establishing a new home base. A few things you will want to consider before reaching for the packing tape:
- Cost of selling your current home
- Cost of a down payment for a house
- Closing costs and a home inspection
- Cost of physically moving your belongings
- Cost of buying new furniture or household items
- Lease considerations
- Security deposit which could include the first and last month’s rent
- New utility costs
Many of these are one-time expenses that you won’t incur again until your next move; however, they can have a significant impact on your budget or savings plans.
As you settle into your new home, you might consider making improvements, which can be a large financial hurdle. There are a few financial tools that can help like a home equity line of credit (HELOC). No matter if you decide to rent or own, talk to your financial team to avoid any cracks in the foundation of your financial security.
Growing your family
Expanding your family is both exhilarating and nerve-racking. One of the first steps to consider is how the new addition to your family will impact your budget. There are many different expenses to consider such as medical costs, childcare, diapers, toys and more. Your financial team can start the planning process with you to calm your fears of the unknown.
You might also want to add a pet to your family, which comes with a new set of regular expenses you’ll need to consider. From veterinary costs to food, training or grooming – there are many different costs that will impact your bottom line.
Experiencing a medical emergency
Medical emergencies and sickness can happen in the blink of an eye, which is why you want to be financially prepared for them as best as you can. One great place to start is to establish a savings fund either with your bank or through tax deferred accounts such as a health savings account (HSA) or flexible spending account (FSA). Carefully review your insurance benefits to see which account is available to you.
Remember funds in your HSA can be used for qualified medical expenses not covered by your health insurance and HSA funds stay with you through every job change. In contrast, FSA funds generally have to be used within the plan year and do not stay with if you change employers.
When a medical bill hits, it is also important to talk with your doctor’s billing office as many providers offer payment plans that are interest free. Additionally, if you are able, take the time to meet with your financial advisor as they can help you form a plan, come up with strategies and make decisions on how to tackle this incoming cost.
Receiving an inheritance
An inheritance or financial gift from a loved one who passed, can have a significant impact on your financial plan. Your road to inheritance is unique to you and how this new addition will impact your financial situation is as well. There is not a “one size fits all” approach on how to integrate your inheritance into your finances and life, but a financial advisor can help you make a decision that makes sense for your present needs and future goals.
Life never slows down and comes with many different financial impacts. With a financial plan and a team of trusted financial advisors at your side, you can confidently navigate each life change and still achieve your financial goals.
Interested in learning more about Private Wealth Management? With UMB, you have a guiding partner from financial advising and investment portfolio management, to wealth-building strategies and retirement and legacy preservation plans.
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Financial planning services are offered by UMB Private Wealth Management and UMB Financial Services, Inc. UMB Private Wealth Management is a division within UMB Bank, n.a. that manages active portfolios for individuals, fiduciary accounts, employee benefit plans, endowments and foundations. UMB Bank, n.a., is a subsidiary of UMB Financial Corporation. UMB Financial Services, Inc.is a wholly-owned subsidiary of UMB Financial Corporation and an affiliate of UMB Bank, n.a.
This material is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities or engage in any specific investment strategy. Statements in the presentation are based on the opinions of the author and are subject to change at any time without notice. You should not use this presentation as a substitute for your own judgment, and you should consult the appropriate financial professional before making any tax, legal, financial planning or investment decisions.
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