5 tips for long-term financial planning

NEW YORK, Jan. 19, 2022 (GLOBE NEWSWIRE) — Financial planning is easy when there’s only one person to consider. But adding a partner to the mix can add some complexity to the mix. The good news is that financial planning for a couple can be more effective because there are often two people contributing and working toward common goals.

Here are five long-term financial planning tips for getting the most out of money management with a partner.

1. Be transparent with assets and debts

Transparency is paramount when it comes to finances. Unexpected surprises with hidden debts or assets can quickly cause a rift between partners.

During an initial conversation about financial planning, lay out everything from assets to debts. Understanding where both partners are starting financially can be a big eye-opener, and it also allows them to commit to working towards the same goals.

2. Set goals as a team

When couples start to talk seriously about finances, they often plan to be together for the long term. This means that it is essential to do the financial planning with this in mind. Even if one partner is the primary or sole breadwinner, both people should have a say in common goals.

Goal setting is most effective when broken down into short, medium, and long term goals. For example, the short term goal might be next year’s family vacation, the medium goal might be saving for a down payment on a new home in five years, then the long term might be things like ‘pension saving.

3. Set up protection

It can be difficult for couples, especially newlyweds, to think that their partner is gone. But conversations about life insurance need to happen, especially if there are shared financial responsibilities, like a mortgage. Couples can consider options such as term life insurance or whole life insurance, which provides a death benefit if the policyholder dies. But a whole life insurance policy also has a savings component that can provide a cash value account that the couple can also use later in life.

4. Focus on retirement savings

As the saying goes, the days are long, but the years pass quickly. Whether couples are ready for it or not, they can approach retirement sooner than expected. There’s rarely a good reason to put off saving for retirement. The earlier a couple starts saving, the more compound interest works in their favour.

5. Plan for emergencies

Emergency savings serve as a financial buffer between a financial plan and life’s unexpected, yet costly, surprises. Yes, of course, it is possible to optimize the destination of each dollar. But if life adds a flat tire or a medical bill, the plan can be derailed.

That’s why it’s essential that every long-term financial plan contains an emergency fund. The general recommendation is to have around six months of living expenses set aside in cash. But as the couple ages and their financial situation changes, that number could rise or fall accordingly.

The essential

For some couples, financial planning can be stressful. But keeping the focus on key areas like transparency, goal setting, protection, retirement, and emergency savings can make the planning process easier. Don’t forget that hiring a finance professional is also always on the table. Sometimes the unbiased voice of a financial advisor can help couples get on the same page.

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