Written by There are two things to consider when determining if you need financial advice from a professional. You need to consider whether you have a question about your finances and the impact of the situation if you misjudge it. This often means there are handful of times in your life where it is essential you make an informed financial decision.
And like your favorite movie character, you need an experienced guide to help you overcome the challenge. In the movie cars, Lightning McQueen needed Madar to teach him that he could rely on others without it being a sign of weakness. Luke Skywalker needed Obi-Wan Kenobi to teach him the way of the force. Even Thor needed Jane Foster to help him navigate his way around Earth while he looked for Mjolnir. Think of me as your guide. In this article, we will discuss the seven most common life events that might have you questioning what to do next.
Tired of the debt
The average American has a little over $90K of debt. An astronomical number that is only getting larger. There are many causes of this problem, such as stagnant wages and a higher cost of living to name a few. Yet, the root of this problem is that close to 80% of Americans are living paycheck to paycheck. 80% of Americans are one hospital bill, one car breakdown, one lay-off from losing everything. By taking control of your debt, you can free yourself from the burden of financial catastrophe.
Marriage or divorce
Marriage brings a ton of questions with it. You may be wondering whether you should combine bank accounts or add each other onto your current accounts. Others are trying to determine how marriage will impact their retirement planning. The long and short of the discussion is, are you better or worse off financially after your marriage? Divorce is on the opposite side of the same coin. What accounts are you keeping versus what accounts are they getting? Do you need to share your retirement pension or 401(k)? Your arrangement may require you to make alimony or child support payments for the foreseeable future. Regardless of the situation, you need to know the impact and the best way to mitigate it issue.
Large purchases
Whether you are looking to purchase your first home, a rental property, or an investment property; you are going to have questions. Sometimes, you just want to make sure your numbers are right and want a second opinion. Other times, you want to make sure you are being wise with your money and not wasting it on something you won’t appreciate in 10 months. In addition to real estate, it may be worth receiving financial advice regarding the purchase of a business, a boat, a car or even a sizable vacation for you and your loved ones. Have you considered what percentage of your income is too much to tie up in any one venture? Where is the money you are allocating towards this purchase coming from (because all money is not created equal)? Are there tax implications you need to prepare for ahead of time? Large purchases are much more than a question of, can I afford it. If you are not asking yourself the right questions, you may overlook a key aspect of your decision.
Starting a business
So much goes into starting a business. As a business owner myself, the decision involves much more than the amount of money you have in your account. It often ends up being a question of time and support. Does your spouse believe in the business? If you are starting your business while working, are you willing to work two full-time endeavors in the early going? Once you have a grasp around the human capital needed to grow your business, you can start creating your one-, three- and five-year plans. We can meet to discuss proper funding options and your exit strategy for when you are ready to retire.
Planning for retirement
Retirement planning has become an essential part of financial planning. There was a time when the majority of companies paid you a pension and gave you a gold watch after 30 years of service. Then you would retire, receive social security and pass within a decade of retirement. Now, less than 20% of companies offer a pension and social security covers a significantly smaller portion of your retirement income. Not to mention people are now living two to three times longer in retirement. This change in life expectancy, along with the fact that you required to cover the majority of retirement income now means planning is needed more than ever. In addition, retirement planning is the first leg of generational wealth. You cannot leave an inheritance to your children if you can’t financially take care of yourself in retirement. Without a retirement plan, your retirement may compose of what is called, ‘reverse legacy’. Which is, instead of you leaving your children an inheritance, you are a drain on their finances. Your children give you money to make sure you are okay during retirement.
Growing your family
As a father myself, my desire to pass on my love, knowledge and wisdom to my children is an everyday commitment. However, growing a family also requires a significant amount of financial consideration. Everything from whether your car and house fit your growing family, to whether you have enough life insurance to protect those you love. If you are dealing with student loans, you may want to explore a few college funding options for your kids. As you age, your attention may turn to wealth transfer and other legacy decisions.
Winning the lottery or receiving an inheritance
You daydream about the day you receive a sizable chuck of money and then one day it happens. What do you do next? For many, they either want to make a large purchase or pay off a bunch of debt. While there is nothing necessarily wrong with either choice, you need a plan to make sure the money is used properly. There are horror stories about people who win the lottery and lose all their money within three years. The reason is simple. In part, you have created a lifestyle based on a certain amount of income. It is going to sound strange, but if you are not aware of how to make a living at a higher income, you will ultimately revert back to the life you have come to know. By meeting with a financial planner, you can be exposed to new strategies that will ensure your inheritance doesn’t run out.
Final thoughts
You should get financial advice when you are not sure what to do and when the financial impact is significant. If you are not sure what financial strategy makes the most sense for you, then meeting with a financial professional can help build clarity. You don’t want to gain wisdom from your own learning mistakes when at all possible. Ideally, you can lean on the wisdom of your financial planner and her experiences helping people accomplish their financial goals. Even if you are confident in your financial strategy, if the financial impact is significant, getting a second opinion could be critical. We are here to help and just because you can go at it alone, doesn’t mean you should.
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