Financial planning for life’s unexpected events

Financial planning for life's unexpected events

If the last year is anything to go by, ‘expect the unexpected’ has never been more appropriate. It’s virtually impossible to anticipate life’s unexpected events, but factoring these concerns into your financial planning journey will help reduce your worries in times of change.

Research from Standard Life revealed that within the financial services arena, the main concerns at the start of the pandemic included market volatility and its impact on investments and retirement planning. A survey of 250 UK advisers found 66% were more likely to receive enquiries on market volatility. 41% were more likely to receive queries around retirement planning, and 23% reported an increased likelihood of receiving questions linked to estate planning and protection planning.

So, let’s have a look at life’s unexpected events and how financial planning can help you tackle them.

What is a life event?

At Balance: Wealth Planning, we see this as a transitional moment in your life, a life-changing event. When you reach a crossroads, anticipated or otherwise, and need to make a specific set of choices.

Unexpected life events might include:

Now some expected events, we might have planned for, but when something unexpected happens, like the pandemic for example, it might change our plans:

Some of these events are more prosperous than others, but in any case, in times of change, we need to adapt.

Over the past year, we might think we’ve become a lot more resilient and that any future life events are less likely to phase us. And, as things improve, we return to being comfortable. Of course, when everything is going fine, why would we want to think about anything going badly?

The ongoing pandemic is one of the most significant life events that many of us have seen. Many have suffered the effects greatly during this time, and we all would have preferred a different year to the one we had. But, without the lows, how would we know to appreciate the highs?

During unexpected life events that might cloud your judgement, taking a step back to decide what move is the best for you to take next can be vital.

Stress-less about money

When faced with an unexpected life event, it can be overwhelming. You’ll have lots of decisions to make, amongst lots of change. One burden you don’t want is to be worrying about money. Money worries can have a significant impact on your overall health and wellbeing.

During times of uncertainty, you’ll want to do everything you can to keep a level head, make actions to simplify your life where possible, and take control of the things you can.

One area you can always work on is your finances.

Our six steps of financial planning will prepare you for life events, as and when they occur, so you are secure in a time of potential uncertainty.

If you’re not sure where to start, here’s a complete financial planning checklist to help you on your way.

Financial planning for life’s unexpected events

So, what can you do to prepare for life’s events and everything it throws at you? Here are our financial planning tips for life’s unexpected events:

  • Emergency fund

Life has a way of derailing you when you least expect it, but have you got enough stashed away to cover your expenditure whilst things are a bit rocky?

Ideally, you should reserve 6-months’ expenditure in your emergency fund.

  • Backup budget

You might already know your ideal expenditure, which includes all your nice to have items. But what happens if things become a little tighter? A backup budget is essential. Go through and cut any non-essential expenditure, so you know the minimum you’ll need when times are a bit tough.

  • Protection

Now, it’s never nice to think about becoming ill or experiencing loss, but we must do. Creating a contingency plan is incredibly important.

Do you have life insurance? If yes, then have you checked that your policy offers the protection you need? Review your other insurance policies as well. Are you fully protected, or do you need additional cover?

  • Wills and Power of Attorney

Creating a will makes sure that your assets are distributed in line with your wishes once you have gone. A Power of Attorney takes care of your assets (and health decisions) whilst you are still alive but might not be capable.

Having both in place will ease the strain on your loved ones at a difficult time. They may also maximise your assets in the best way possible.

  • Cashflow modelling

Having a financial plan which includes cashflow modelling offers an invaluable lifeline. You can forecast your wealth in the future, stress-test different scenarios and adapt your plan as necessary. Because let’s face it, things change.

We’ve all recently had to face the reality that some things are unexpected, and we can’t plan for all of life’s events, but good financial planning will equip you with the right tools and knowledge to withstand whatever may come your way.

If you have any questions or would like to discuss your finances or an existing financial plan, please don’t hesitate to get in touch and speak to one of our professional financial planners.