Life inevitably involves twists and turns, with some that are expected while others may be entirely unplanned. But whatever your situation, chances are your financial needs may change over time.
Here, we consider five major life events, and the basic financial considerations each stage may bring.
It’s easy to forget about the financial implications of getting hitched amid the excitement of wedding planning and starting married life. However, moving from single to married status is a time to put some financial safeguards in place.
With plenty of us getting married later in life, you may want to consider drawing up a pre-nuptial agreement before the big day. While this isn’t the most romantic step, it could be financially wise. This agreement states what assets you have when you enter the marriage, and helps determine the financial outcome in the event of a split.
When you marry, any existing will you’ve made becomes invalid. You’ll need to make a new one to clarify what will happen to your pensions, investments and other assets should you pass away. Otherwise, your estate will be subject to the law of intestacy. Typically, this means your assets will pass to your spouse or civil partner, but this isn’t always the case.
Having a baby
Starting a family is an exciting time but it’s also important that you can financially protect your family.
If you or your partner were to suddenly pass away, you’d want some financial security in place that could pay off any outstanding debts. This is where life insurance could help. Life insurance, also known as life cover or life assurance, is a way to help protect your loved ones financially if you were to die during the length of your policy. When you take out life insurance, the sum paid out should cover any outstanding debts (such as your mortgage) and allow for other expenses such as childcare and your children’s future education costs. Life insurance can help prevent your children suffering financially should the worst happen.
You should also consider what may happen if you’re unable to work due to illness or disability. This is particularly important if you’re self-employed, and don’t have any cover from an employer. Income protection may be an option in this case, paying out a tax-free income after a few months off work.
Saving towards your child’s future may also be on your to-do list; perhaps to give them a leg-up onto the property ladder, or provide towards university costs. You can build up a nest egg from their birth to pay out when they reach 18 by saving into a Junior ISA, for example.
You have time to invest for long-term growth, pooling your money among a wide range of companies in a fund. Investments typically provide a greater return over decades than standard savings accounts. But remember, investing carries risk, and the value of your money can go down as well as up.
Harriet Meyer is a freelance writer and editor specialising in personal finance. She has written for a wide variety of publications, including The Observer, the Guardian, The Sunday Times, the Daily Telegraph, MoneySavingExpert, Moneywise, Investors Chronicle, and Saga.