3 Times When Financial Guidance Can Make a Big Difference

The world today is starkly different from what it used to be. With today's fast-paced lives, less job security, inflation, market fluctuations, etc., making financial decisions is becoming increasingly complex. Managing personal finances effectively requires knowledge, discipline, and above all, a clear understanding of the intricacies of the market. Most people find themselves ill-equipped to navigate the ever-changing terrain of the world of finance. In times like this, the importance of financial guidance cannot be overstated.

A financial advisor can offer you structured financial guidance that covers all your goals and needs. This article delves into the value of financial guidance in three critical areas and explores the benefits of hiring a financial advisor.

Here are 3 areas when professional guidance can make a significant difference to your overall financial well-being:

1. During major life events 

Life is full of milestones and transitions that can shape your personal and financial circumstances and responsibilities. From cohabitation and marriage to buying a house and having children, these life events can introduce financial implications that must be carefully considered. Financial guidance plays a critical role here. Financial decisions made during personal milestones can have long-lasting effects on individuals and their relationships.

Some major life events your may experience include:

a. When you decide to cohabitate with a partner or get married

When two people decide to live together or get married, they may also share similar financial goals and dreams, such as buying a home, saving for retirement, etc. Additionally, they may also decide to share responsibilities, such as paying for joint expenses, including rent, electricity, water, gas, etc. A lot of couples have joint accounts and credit cards. Hence, one person's saving and spending habits can impact the other and vice versa.Understanding each other's financial habits, managing joint expenses, and establishing financial goals become crucial for building a solid foundation. A financial advisor can help couples focus on the essential factors and work together towards building a stable financial future. 

b. When you’re buying a house

Purchasing a home is a significant financial milestone that requires careful consideration and can take years and years to achieve. You need to save for the down payment, plan your mortgage payments, pay property taxes, purchase homeowners insurance, and account for maintenance costs, repairs, renovations, etc. Understanding and preparing for all of these things can be complicated and require a lot of time and effort. It can also take a toll on your other finances and come in the way of your lifestyle and day-to-day expenses. Seeking financial guidance can help you save for your dream house while ensuring long-term financial stability.

c. When you decide to have children

Having children can bring with it its share of expenses. Raising children creates financial stress on parents because of expenses like clothing, healthcare, education, and more. For instance, the average fee at a public college is around $10,423 for the year 2022-2023 and $39,723 for a private college. Parents need to start saving from a young age to ensure they can send their kids off to college. If the child has health issues, they would also need additional funds to cover healthcare. Adoption can also be a financially draining process. Therefore, hiring a financial advisor can be recommended to plan things more strategically and offer your child a better life.

d. During a divorce, separation, or remarriage

Divorce and separation can bring emotional and financial upheaval. It can induce several changes in your financial routine as far as your saving and spending habits are concerned. Couples may share some financial goals. However, with divorce and separation, you may have to divide assets, revisit your financial goals, and determine child support and alimony. Things can get complicated depending on the type of assets and the reasons for divorce. Seeking professional guidance during this challenging time can help you navigate most implications and make informed decisions.

The same can be said in the case of remarriage. You may have assets from your previous marriage or relationships, such as a home. It is important to understand how these blend in with your second marriage. Divorce and remarriage can also affect estate planning. You may have heirs from all your marriages. A financial advisor can help you create an estate plan that accounts for all your needs based on your directions and preferences.

e. If you have special-needs children or aging parents

Having a special-needs child can be financially challenging. The same can be said for aging parents who require additional financial support. You may have to account for healthcare expenses, medical equipment, house help, nursing care, and more to ensure your dependents are comfortable and safe. You may even have to plan for their long-term financial sustainability on top of saving for your financial dreams and goals. Professional financial guidance can be helpful in such situations.

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2. During major career developments

There can be several moments in your professional career where you may need financial guidance. Events like changing industries, professions, earning more, losing a job, changing cities, etc., can directly impact your present and future finances. It is essential to maneuver these prudently, and professional financial guidance can help.

5 major career developments where financial advice can be particularly helpful:

a. During a promotion

A promotion can bring in more money. What you do with this money decides the course of your financial future. Some people may choose to spend it; others prefer to save it. A financial advisor can help you assess your salary increase, potential changes in benefits, and any additional compensation, such as bonuses or stock options. They can guide you on how to allocate the increased income towards your goals, prepare for tax implications of an increased income, and make smart financial decisions to maximize your long-term financial well-being.

b. If you’re offered bonuses and stock options

Many companies offer bonuses and stock options to employees. While a bonus is given as an addition to the employee's salary, stock options are company stocks that may be released when signing the joining letter or after a few years of working with a company. They are both incentives and can help you reach your goals, but it is essential to manage them well. A financial advisor can help you develop a strategy for optimizing these benefits and understand their vesting schedules, potential risks, growth prospects, etc.

c. If you’re transferring or switching employers

If you are considering a job transfer, a financial advisor can help you assess the financial impact of the move. They can help you evaluate and explore new opportunities, go through the new compensation and benefits package, such as retirement plans and health insurance, and choose from multiple offers, if needed. They can help you make financial adjustments to your existing plan to accommodate the new changes.  

d. When you lose your job

Financial guidance is essential in adverse situations of job loss or dismissal from work. A financial advisor can help you navigate the financial impact of such an event, including applying for unemployment benefits, making changes to your budget as per your present situation, managing your severance package, and more.

3. When you’re tackling health issues

Rising healthcare costs, increases in lifestyle-related health issues, and age-related health concerns can all lead to financial complexities. Healthcare remains one of the most essential aspects of financial planning, and saving for it is immensely important. Given the unpredictability of health-related expenses, it is advised to consult a professional financial advisor to ensure you are adequately prepared for any future financial liabilities.

Common health issues that require financial guidance include:

a. A sudden illness or disability

A sudden illness or disability can have a significant impact on a person's financial well-being as most people do not prepare for it. While you can never be sure of whether or not you will ever face such a situation in the future, it is still advised to seek professional financial guidance on the matter and explore different options, understand your insurance coverage needs and disability benefits, and plan well for adverse situations like assisted living, income loss, etc.

b. An early cancer diagnosis

Cancer is one of the most common ailments around the world. Its treatments can be expensive, and you may require long-term care, prescription drugs, help with daily chores, etc., for life. Financial guidance can help you save and invest in insurance plans, use your savings and investments optimally, and find suitable financial assistance programs to help you cover your treatment costs without feeling overburdened.

c. If you experience diminished mental capacity

You may experience diminishing mental capacities as you grow old. This can present challenges in the workplace and make managing your financial affairs difficult. In such situations, it becomes essential to create relevant power of attorneys, guardianships, and healthcare directives for the future that ensure the best interests of your family. A financial advisor can help in all of these situations.

d. For hospice needs

Hospice care may be required for terminal illnesses. However, the costs associated with hospice care can be a concern for families. Financial guidance can help families find the care they need and deserve.

To conclude

While some individuals may possess a good understanding of personal finance, others require professional financial advice throughout their lives to ensure long-term financial adequacy and security. Financial advisors can evaluate the complete financial picture and create customized plans that align with your individual and family goals. Financial professionals can also offer unbiased advice, taking into account both short-term and long-term financial implications. This can be helpful because most people cannot stop their emotions from taking over in trying times.

Use the free advisor match service to find a trusted professional who can offer the right financial guidance to bring a sense of stability and peace of mind during times of change. All you have to do is answer a few simple questions based on your financial needs, and the match tool will help connect you with 1-3 advisors best suited to meet your financial requirements.