We know it’s a cliché but life is a journey and your circumstances and priorities change. Major changes tend to have financial consequences. Here we highlight some of them.
You will probably go through a number of life-changing events over the years, hopefully mostly for the better, although few of us get through without some unhappy ones. We inevitably get caught up in the emotions and practical issues these events throw at us. But major changes tend to have financial consequences. So when something significant happens, make sure you check your finances and make any adjustments required.
Getting married or living together
The good news is that living together is generally cheaper than living alone. Things to review at this exciting time include your Will, pensions and investments, together with life and critical illness insurance. Review your joint income and expenditure and agree a plan. You may find that jointly you have more spare cash. Time to start planning to make your dreams happen!
Bringing up children
Your income may fall and your outgoings will certainly increase – for around 18 years or so. You will want to provide your family with financial security so it is important to review your Will, make sure you have enough life assurance to protect the family’s finances, particularly important if you are taking a career break and losing valuable benefits) and maybe start saving for school or university fees.
Death of a partner or parent
This is a difficult time, when it is important to consider the financial impact of the death on remaining family members, ensuring they are financially secure and that money is invested appropriately and tax-efficiently.
Promotion or changing jobs
If your salary has increased, do you now have surplus income? If so what would you like to use it for? Saving towards a deposit on your first home (or helping your children on to the property ladder)? Paying for your (or your children’s) wedding? Boosting your pension provision? Making overpayments in your mortgage? The amount going into your pension each month will also have increased. Could you be in danger of exceeding your Lifetime Allowance, the maximum amount that you can hold in your pension without having to pay additional tax when you access it?
If you have changed employer, what are the implications for your pension scheme and other employee benefits? Does your new employer offer the same (or better) benefits as your previous one? If not, consider whether you should replace them.
Divorce or separation
Making sensible financial decisions during this highly emotional time can help you get back on a sound financial footing and protect the interests of any children. Should you sell the family home or buy out your partner and take out a new mortgage? Can you split or share your pensions or do you need to set up a new pension? What about any joint investments? Do you need to protect your new lifestyle and that of your children?
Talk to a professional financial adviser
When something in your life changes financial issues are often the last thing on your mind. Yet consulting a professional financial adviser can help ensure that you make the most of your money, whatever the change to your circumstances.
The value of your investments, and the income you receive from them, can go down as well as up, so you could get back less than you put in. Tax advice which contains no investment element is not regulated by the Financial Conduct Authority.