Five Signs You Really Need Financial Planning

Financial planning is one of those tremendously off-putting topics, at least for some. If you don’t already find budgeting and investing interesting, it sounds like drudge work. Yet you should take your money seriously, and you know it.

Usually, people “wake up” to financial planning in their middle years, when they have a fair amount of money saved up and the number of decades ahead seems to be balanced against the decades that have passed.

Is it time to do some financial planning in your life? Here are five signs that it would be a good idea to engage your money a bit more seriously and some tools to help you put any nagging concerns to rest.

The five signs, in rough age order, are:

1) For the first time, you make more money than you spend

When you’re young, paychecks seem to flit by, comically small and eaten up by taxes and Social Security. Unless you spend heedlessly, however, you eventually will find a few hundred bucks a month unencumbered. Get thee straight to human resources and open that 401k! Retirement planning is probably not on your radar just yet, but after a few years those savings will pile up.

2) You get married or otherwise share your life

A lot of people think marriage is a big commitment. It is, but buying a house with another person is an equally large and complicated undertaking. Kids, too, bring with them a major load of spending and planning problems. Schools, vacation, sports and pastimes. If you don’t have some financial planning books on your shelf by now, get cracking!

3) You begin to worry about others

Getting fired or laid off from a job is stressful, yet people often can make do. But what would happen to your significant other if you simply didn’t come home? A car accident would be heartbreaking news for your spouse, but then he or she has to pick up the financial pieces and might face dramatically different circumstances. Insurance as a financial planning tool is very important.

4) Your investments start to weigh on you

When you’re young and accumulating money in retirement accounts, it’s pretty easy to ignore the stock market. And you probably should. Once you get to the final 10 or 15 years of your career arc, the specter of a potential loss can be difficult to ignore. Financial planning for retirement is now front and center.

5) Retirement choices beckon

Once you get over the hump of the middle years of saving and investing, it should be time to kick back and indulge a bit. You will nevertheless have to continue to manage your money prudently in retirement and do planning to benefit heirs or charities you admire. Long-term care and health concerns also will crop up.

Nobody “loves” financial planning, except perhaps people in the business. But you really should engage the topic head-on and ahead of your needs to avoid turning simple decisions into unnecessary panic.