Life is, as often and famously quoted, just one thing after another. We only have so much control over what those ”things” are, but are otherwise thrust into “things” with all the randomness you can expect. First loves, first homes, first children – each is something you can often decide on, but is far more likely to be imposed upon you with very little notice at all.
Some of these are much bigger than others. Major life events such as marriages, children, retirement and the like can be major drains on both our financial and emotional wellbeing, particularly when they’re unplanned. How, then, can you prepare appropriately for major life events?
Planning For The Unplannable
First, let’s acknowledge the elephant in the room: lots of life’s most important moments are surprises. Surprise pregnancies, surprise redundancies, surprise engagements and surprise bereavements, whether good or bad, a surprise is a surprise. Whether a happy accident or just a straight accident, it’s important to have some contingencies in place to keep you afloat.
This is what makes something like an emergency fund so important from a financial perspective. A blown boiler or a last-minute job dismissal can be disastrous for your bank account, but it doesn’t need to be. A savings fund that covers up to six months of your wages can be the stopgap needed to keep you afloat when things get tough.
Financial Planning
On a broader level, you need to have some financial awareness surrounding the next big life events on the horizon. If you’re hoping to settle down and start a family, then you know that a first home and at least one child are in your not-too-distant future – and you need to plan your finances accordingly.
The emergency fund is just one part of this equation. You can have separate funds with specific life events in mind, each of which could benefit from specific mechanisms available to you. With respect to buying a house, for instance, you’ll need a deposit and a decent credit score. The former can be achieved using a credit building card to establish a history of lending; the latter can be achieved by saving money in a LISA, which benefits from a 25% government subsidy up to £4000 each year.
Emotional Resilience
It’s easy to think about the financial aspects of life events without acknowledging the emotional side of the equation. Some transitions in life can be especially difficult emotionally, and that difficulty can impact your life elsewhere. Bereavement is a strong example, but less profound events like a short period of unemployment can still contribute significantly to stress and poor mental health. Consider pre-empting these feelings and speaking with a counsellor, or simply asking for support from family and friends when big things happen.
Legal Considerations
Finally, there are some events that’ll require you to seek legal assistance. Divorce, bereavement and buying a property are the big three events for which you need to bear this in mind, and each requires its own specialist advice. Also, keep all your documents up to date and store them in an easily accessible place; you may need to discuss title changes, name changes, company details, and so on!
