When life changes, money inevitably changes too. Major life events often prompt re-evaluating financial priorities, strategies, and habits. Understanding the intersection of life transitions and financial adjustments is crucial for maintaining financial health and achieving long-term goals.

In our recent client survey, many of our respondents said that they chose to invest with Sterling Asset Management after a major life-changing event. We have also discovered that people view financial planning as a simple process and are not prepared for these changes. In reality, there is no cookie-cutter solution to the number of financial challenges that go hand-in-hand with life. In the words of Heraclitus, “The only constant is change.” When it happens to you, it’s time to give yourself grace and turn to your personal financial advisor to help you draft a new road map, and establish new priorities.

This article series explores how different life changes influence financial behaviours, and offers insights as well as relatable examples of how we help our clients with managing effectively, starting with marriage and parenthood.

Marriage

Marriage is a significant life change that affects financial behaviours. Couples often have to merge their finances and share financial responsibilities which requires open communication about spending habits, financial goals, and existing debts.

Making sound financial decisions is already hard enough as an individual, but when you factor in another person’s ideas and beliefs about money, making joint financial decisions can be even more challenging. Shifting your mindset from “yours and mine” to “ours” requires good communication and compromise. I often recommend that newly-weds open a joint bank account for shared expenses and maintain individual accounts for personal spending. Additionally, it is best to begin planning for major life goals together, such as buying a home or starting a family.

Effective management involves establishing a joint budget, setting financial goals, and regularly discussing financial matters to ensure alignment and avoid conflicts. I have had the privilege of assisting couples along this journey, many times aiding them in documenting their goals, establishing feasible timelines and ensuring they remain on track.

Parenthood

The arrival of a child brings about another set of financial changes. Parents must now account for new expenses such as childcare, education, health care, and everyday needs. Budgeting becomes more complex, and saving for your child’s future, including college funds, becomes a priority.

I remember a client who came to me concerned about not having a plan for her 12-year-old daughter’s tertiary education. After briefly assessing her income, expenses, and financial goals, I recommended our mutual fund for its high historical growth and the ease of depositing. I also advised that she make monthly contributions of US$300 and increase the amount over time as her income grew. In our most recent portfolio review, she was pleasantly surprised by the fund’s double-digit growth within the last two years.

In conclusion, life changes significantly impact financial behaviours, requiring individuals to adapt their financial strategies and habits to new circumstances. Proactive financial planning, effective communication, and adaptability are key to managing these changes and ensuring a secure financial future. By understanding the financial implications of different life transitions and implementing appropriate strategies, individuals can navigate these changes successfully and maintain financial well-being.

— Anna-Joy Tibby is assistant vice-president, personal financial planning at Sterling Asset Management. Sterling provides financial advice and instruments in US dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at www.sterling.com.jm

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