Financial Planning for Life's Big Moments: A List to Think About

Getting Married

Marriage is not only a personal and emotional commitment but also a financial one. Here are some key steps to consider for effective financial planning before and after tying the knot:

1. Discuss Financial Goals:

  - Have an open conversation with your partner about your financial goals, including savings, investments, and retirement plans.

  - Agree on short-term and long-term financial objectives.

2. Create a Budget:

  - Develop a joint budget that accounts for combined incomes and shared expenses.

  - Include all aspects of your life, such as rent/mortgage, utilities, groceries, insurance, and entertainment.

3. Manage Debts:

  - Review eachother’s debts, including student loans, credit card balances, and personal loans.

  - Develop a strategy to pay off high-interest debts first to reduce financial stress.

4. Marriage Allowance:

  - Take advantage of the Marriage Allowance if one partner earns less than the personal allowance (£12,570 for the 2024/25 tax year). This allows the lower-earning partner to transfer £1,260 of their personal allowance to the higher-earning partner, potentially saving up to £252 a year in taxes.

  - Apply for the Marriage Allowance via the HMRC website.

5. Update Legal Documents:

  - Update your wills and any beneficiaries on your accounts and policies.

  - Consider creating a prenuptial agreement if necessary to protect individual assets.

Having Children

Starting a family is a joyous event that brings additional financial responsibilities. Here’s how to prepare financially for parenthood:

1. Estimate Child-Related Costs:

  - Understand the costs associated with raising a child, including childcare, education, healthcare, clothing, and food.

  - Create a budget that accounts for these new expenses.

2. Maternity and Paternity Leave:

  - Review your employer’s policies on maternity and paternity leave.

  - Plan financially for any unpaid leave periods.

3. Child Benefit:

  - Apply for Child Benefit through HMRC. This provides a weekly payment of £25.60 for the first child and £16.95 for each subsequent child as of 2024.

  - Note that higher earners may have to pay back some or all of their Child Benefit through a High-Income Child Benefit Charge.

4. Junior ISAs:

  - Consider setting up a Junior Individual Savings Account (ISA) for tax-free savings on behalf of your child. You can now put up to £9k per year in to a JISA (2024/25).

  - Encourage family and friends to contribute to your child’s savings.

5. Education Savings:

  - Start saving early for your child’s education, whether for private schooling or university fees.

  - Explore investment options that can grow over time to meet future educational expenses.

6. Insurance:

  - Ensure you have adequate life insurance to protect your family financially in the event of your death.

  - Consider critical illness cover and income protection insurance to safeguard against unforeseen circumstances.

Planning for Retirement

Retirement might seem far off, but planning early can ensure a comfortable and secure retirement. Here’s how to approach retirement planning in the UK:

1. Understand Your Pension Options:

  - Review your workplace pension scheme and consider maximising your contributions, especially if your employer matches them.

  - Other pension options include Self-Invested Personal Pension (SIPP). These give you greater control over how you invest.

2. State Pension:

  - Check your State Pension forecast on the GOV.UK website to see how much you’re likely to receive.

  - Ensure you have at least 35 qualifying years of National Insurance contributions to receive the full State Pension.

3. Save and Invest:

  - In addition to pensions, diversify your savings and investments to build a robust retirement fund.

  - Consider ISAs, which offer tax-free savings and investment options, to supplement your retirement income.

4. Review Your Retirement Goals:

  - Determine the lifestyle you want in retirement and estimate the income you’ll need to support it.

  - Regularly review and adjust your savings and investment strategy to stay on track with your goals.

5. Estate Planning:

  - Develop an estate plan to ensure your assets are distributed according to your wishes and to minimise inheritance tax. You will usually need a professional to navigate this plan as it can be very complex.

  - Review and update your will regularly and consider setting up trusts if applicable.

6. Long-Term Care:

  - Plan for potential long-term care needs, which can be a significant expense in later life.

  - Explore long-term care insurance options and consider setting aside funds specifically for healthcare costs.

Beyond the Basics

Financial planning doesn’t stop with marriage, children, and retirement. Here are additional considerations for lifelong financial health:

1. Continuous Education:

  - Stay informed about changes in tax laws, pension regulations, and financial products.

  - Attend financial planning workshops and consult with financial advisors to enhance your knowledge.

2. Emergency Fund:

  - Maintain an emergency fund with 3-6 months’ worth of living expenses to cover unexpected costs.

  - Regularly review and adjust your emergency fund as your financial situation changes.

3. Regular Financial Reviews:

  - Conduct annual financial reviews to assess your progress towards goals and make necessary adjustments.

  - Consider using financial planning software or apps to track your finances and stay organised.

4. Diversification:

  - Diversify your investments to spread risk and generate the best risk-adjusted returns.

  - Include a mix of asset classes such as stocks, bonds, property, and cash in your portfolio. These can be easily accessed through investment vehicles such as funds or ETFs.

Conclusion

Financial planning for life’s big moments requires careful consideration and proactive management. Whether you’re getting married, starting a family, or planning for retirement, taking the time to understand and implement sound financial strategies can lead to greater security and peace of mind. By discussing financial goals with your partner, creating a budget, maximising tax benefits, and investing wisely, you can navigate these milestones with confidence and build a solid foundation for your future.

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Disclaimer: This guide is not advice, if you do require advice seek professional help.