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Financial planning is essential for young adults as they are faced with major life changes that can affect the amount of money they have to save and invest for retirement. Here are 5 life events that require financial planning.

 

  1. Marital status

Married or single? A new chapter in their life starts when they tie the knot. That means finding a roommate, moving into an apartment, buying a car, or even getting married. But with marriage comes new responsibilities such as balancing household expenses. Also, if they are in college during the school year, how will they handle paying rent and living costs while their spouses work full time and go to school part-time? The good news is that their finances don’t need to be thrown out of whack just because they’ve got a partner.

 

  1. Starting a family

If they are ready to start their own family, it may mean having children and having to provide for them on top of their other obligations. If they already have kids, how will they juggle saving money to afford daycare or preschool, plus pay for afterschool activities like sports lessons and music classes? And who will take care of baby/child-related expenses, such as diapers and doctor visits, while their spouse works? Luckily, there’s help and support available through government assistance programs and organizations, such as the American Association of Retired Persons (AARP), which offers resources for child care expenses and more help for families.

 

  1. Losing a loved one

Loss is never easy, but the death of a parent, sibling, friend, or significant other can impact their finances in ways they’re not prepared for. The first step in preparing themselves for the loss of a loved one is acknowledging that they are grieving a loss and planning for this inevitable eventuality. They might say goodbye by making funeral arrangements or choosing an appropriate memorial instead. Then, consider whether they want to continue working at their current job or leave. Depending on their situation, they could also apply for disability benefits. When thinking about what they’ll do if they lose a loved one, it’s important to remember that their budget should reflect their personal preferences and needs.

 

  1. Job transitions

Moving from one field to another or changing careers entirely can be difficult, especially if they’ve been working in one field for years or decades. In addition to adjusting expectations based on a change in the industry, they’ll need to adjust their spending habits since many companies offer fewer paid vacation days than what they were used to, and some employers may also make cuts in retirement savings plans, health insurance coverage, and overtime pay.

 

  1. Retirement plans

Retirement requires long-term planning, and if they haven’t yet started planning, now is the time to begin. It’s easier to develop a solid plan once they know their goals and priorities so start early! The most common sources of money for retirees include Social Security benefits, pensions, and investments. How much is enough depending on age, marital status, lifestyle choices, and inflation rates.