Planning Prevents Pressure: Life Transitions

Financial planning is more than savings and investments. It’s about more than money. Financial needs and priorities change in response to life’s transitions. Good financial plans help prepare for those transitions.

Managing them is one of the keys to keeping your finances in balance.

Planning Prevents Pressure

One of my clients, a senior corporate executive let’s call Jack, said his favorite saying at work is, “Planning Prevents Pressure.” When it comes to your financial future, it’s easier to prepare for what’s ahead than it is to repair mistakes.

With that in mind, as part of financial planning, a planner should ask you to anticipate what’s coming up? What transitions might be in your future?

Most Impactful Transitions

Here are six example categories and several important transitions that can go along with them where planning ahead can help prevent high costs, or regret, later.

Family

  • Expecting a child
  • Special family celebration
  • Assistance to a family member
  • Child going to college
  • Child getting married
  • Empty nest

Health

  • Caregiving for an aging parent
  • Disability or chronic illness
  • Recent death of a family member
  • End of life directives

Work

  • Contemplating career change
  • Job re-structuring
  • Expanding a business
  • Starting a new business
  • Acquiring a business
  • New job training or education

Retirement

  • Downshift in worklife
  • Full retirement
  • Changing residence
  • Starting Social Security income
  • Eligibility for Medicare
  • Starting retirement distributions

Other Financial

  • Refinancing a mortgage
  • Reconsidering investment philosophy
  • Significant investment gain
  • Significant investment loss
  • Considering investment opportunity
  • Receiving inheritance
  • Choosing between pension options

Giving

  • Sending a stipend to a family member
  • Starting gifts to children / grandchildren
  • Developing an estate plan
  • Creating a scholarship
  • Funding a cause or event
Priorities Change

Which transitions are most important? Each individual, even within a couple, will have different answers. And those answers may change over time. As new transitions arise and old ones fall away, a well-done financial plan can adapt.

The easiest way to throw off your financial plan is to make a rash, emotional decision in the middle of a difficult moment. One of the ways a plan saves money is to help avoid overreactions to the ebbs and flows of life. It allows you to have greater control by taking a more proactive mindset about your financial future.

Planning Prevents Pressure! Thanks Jack!

This post was adapted from a post by www.blueblazefa.com, a financial planning firm offering tools on navigating life’s transitions.

Holly Donaldson

Holly P. Donaldson, CFP® writes and consults on the psychology of money. Her fee-only, product-free financial planning practice focuses on increasing financial self-efficacy for those seeking a financial navigator to help them make good decisions. She is the author of The Mindful Money Mentality: How to Find Balance in Your Financial Future (Porchview Publishing, 2013) and publisher of the award-winning monthly e-letter, "The View From the Porch." With a fully virtual practice in Seminole, Florida, she primarily serves clients located in the Tampa, St. Petersburg, and Clearwater areas. Holly will also work with clients who are a good fit located elsewhere in the United States.

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