Are you financially prepared for life’s major events?

Nimi Akinkugbe, Personal finance and wealth management expert who transitioned from the corporate world to pursue her entrepreneurial goals

Are you prepared for this year’s life events? Our lives are shaped by various events that come with financial consequences. Too many of us get swept up in such events without being prepared financially.

Life events range from the significant milestones of starting a first job, to getting married and starting a family, educating your children, losing a job, relocating, buying a home, caring for ageing parents, losing a loved one, and planning for your retirement and your estate. What are the major events you anticipate this year? Here are a few events that you should be prepared for.

Are you expecting a new baby?

The birth or adoption of a child is one of life’s most fulfilling events. New parenthood naturally comes with new financial responsibility and raising a family presents new budgeting challenges. Start to review and estimate current and future expenses, from nappies to university fees! It is never too early. Start now to project and plan, it will make you better prepared in the long run.

Child-care is likely to be a major expense especially as many mothers must return to work. Even if you are able to stay at home with the children, bear in mind that an extended absence from work, skills and training, could limit your future career options, and therefore your lifetime earning potential. If you do wish to pursue a career, consider part-time work or pursuing training and education whilst the children are still young.

Although secondary school and higher education are decades away for your new baby, the sooner you begin to save for your child’s education, the better. You will have the benefit of a wider variety of investment and savings options to achieve your goals. An equity mutual fund would be ideal savings for all the early cash gifts that your child might receive, as there are strong prospects for long-term capital growth.

The birth of a child is a good time to make a will if you don’t already have one and review your insurance policies to include the latest beneficiary. Don’t view the process of making a will as negative; you do need to be prepared for the unexpected. A will should make provisions for guardianship for minors should they lose both parents.

Are you planning to get married this year?

Money is an important aspect of marriage and one of the most difficult topics to deal with. Whilst the time leading up to the wedding is very busy, try to make time to discuss money matters with your fiancé before the register is signed; open communication will help you both to align your goals which ultimately makes for a more secure and successful marriage.

As you build financial security together you will need consensus and compromise for some money related issues. It may not sound terribly romantic, but issues such as establishing joint bank accounts are important matters that ought to be discussed.

Home ownership, having children and funding their education naturally should be on the agenda for discussion as well. Don’t feel pressured to have a huge wedding that you cannot really afford. You can have a small and simple yet classy wedding without the entire village being in attendance. Guests are merrymaking just for the day…you have a lifetime to build together. Don’t forget to review your important documents carefully to ensure that they reflect your new marital status.

Often, the financial burden of the wedding falls on the shoulders of parents already in retirement. Where will this money come from? If your child’s wedding is imminent, plan ahead and try to work within a budget appropriate for you so that costs do not spiral completely out of control and jeopardize your finances. Do not be in competition with your in-laws who may have far greater resources than you do.