For young couples starting families, buying their first home and/or other real estate. Covers mortgages, credit cards, interest rates, children’s education savings plans, joint accounts for couples and the like.
When it comes to making huge decisions that amount to starting a new chapter in your life, financial planning is an essential precursor to such significant changes. In fact, it’s pretty irresponsible to, for example, buy a house before you’ve prepared yourself financially. Not only is it irresponsible, but in biting off more than you can chew you’re likely to choke; foreclosure isn’t just an empty threat your lender makes so you pay your bills on time.
In addition to buying a home, starting a family is another stage in your life that requires a thorough financial plan beforehand. Young adults who are ready to buy homes and start families are at an advantage because, by starting early, they have plenty of time to get their finances in order so huge life changes don’t lead to financial ruin.
However, many young adults don’t begin their preparation as early as they could despite experts who say it’s never too soon to get prepared. With that in mind, here are financial planning tips that will make buying a home and starting a family two of the best chapters in your life story.
Interesting piece by financial TV guru Suze Orman about why she’s decided to quit her 13-year long TV gig. She sounds excited about moving on to whatever will happen after TV: clearly she’s ready for an equally exciting and influential encore career.
This week, MarketWatch zeroedin on 5 Disastrous Trends impacting future retirees. They are plunging savings rates, vanishing workplace pensions, lack of emergency savings, rising life expectancies [see the Hub’s Longevity & Aging section devoted to this theme] and over dependency on Social Security and Medicaid.
Well, perhaps retirement is overrated anyway? That’s the stance Lawrence Solomon takes in a piece this week at the Financial Post: Here’s a Retirement plan — Don’t! This is more or less what we’ve been arguing all along here at the Hub. I call it the JKW Retirement Plan: JKW stands for Just Keep Working.
However, as I’ve also argued, just because you never plan to retire, doesn’t mean you don’t need to seek Financial Independence. Findependence is always a desirable goal and the sooner the better. Retire by 40 asks the question How long will it take to achieve Financial Independence? It includes an interesting chart that reveals the hard reality: it all depends on your savings rate. If it’s low, it could take more than half a century to reach Findependence. If you could save 90% of your income it could take as little as three years. Note this observation:
The average retirement age in the U.S. is 62. That means most people have about 40 years to save and invest. If your saving rate is 5%, then you probably will not reach financial independence before retirement. Even 10% is iffy.
The Christian PF blog has an enthusiastic book review of a book that’s already a NYT bestseller: Living Well, Spending Less. The reviewer notes that while it’s not a “Christian” book per se, it’s packed with scriptural references but should resonate with anyone in this materialistic culture: it’s all about decluttering, being content with what you have, cutting your grocery bill in half and more. A bit like the phrase “guerrilla frugality” in Findependence Day!
North of the border, Boomer & Echo takes a look at how the financial advice business is going to be shaken up by a term that may make your eyes glaze over: CRM2. Sounds like inside baseball but read why Robb Engen says CRM2 will usher in A New Age of Enlightenment for Investors.
A paid-for home is the foundation of financial independence, according to this web site. But long before you reach that stage, stepping up to buy your first home can be a daunting process. It takes time and careful planning. Finances are especially important when you’re considering taking the huge step of buying your first home.
Not only do you have to consider whether you can come up with the down payment and closing costs, but you also have to think about whether you can afford the upkeep of ownership, potential repairs and improvements, and the full cost of buying a home in the first place (including principal and mortgage interest payments). There are a lot of variables to consider and potential home buyers need to be prepared for everything involved in the home buying process.
The True Cost of Home Ownership
Financially speaking, buying a home is a big deal. There’s a lot to think about in terms of where the money will go. It goes well beyond just paying for the home that you decide upon. There are plenty of areas where you have to ensure that you can afford this process, including: Continue Reading…
Seniors are now twice as likely to rely on their home equity to fund their retirement than before the financial crisis, says a Fidelity retirement survey. They’re also more likely to work in retirement, provided they can find employment.
Since 2005, the number of Canadian retirees relying on home equity to fund retirement has more than doubled from 14% to 36%, says the survey, commissioned by Fidelity Investments Canada ULC.
Conducted by The Strategic Counsel, the 10th Fidelity Canadian Retirement Survey of retirees or workers 45 or older also finds:
• Since the financial crisis, the number of retirees saying it has been more difficult than expected to retire has dropped from 28% in 2009 to 20% in 2014
• More pre-retirees expect to work full or part-time in retirement (62% in 2014 compared with 55% in 2005) Continue Reading…
I like to keep tabs on my finances for both the short and long term. A monthly spending summary is great for keeping track of where your paycheque goes, and an annual forecast works well for spotting trends and opportunities for your money.
But it’s also nice to gaze into the future. I want to know what my finances will look like in 20+ years so I use a spreadsheet to take a 50,000-foot view of my long-term finances.
Posted By 
By Dane O’Leary
