Jean: From my experience, people seek financial advice for specific reasons, not just on a whim. Your research confirms this observation.
Terri: Absolutely. An October 2018 survey revealed that 77% of affluent investors began their financial planning when their first child was born. This finding highlights how the arrival of a child often instills a strong sense of responsibility regarding finances and long-term goals.
Jean: I can relate to that. After my first child was born, my ex-husband and I rushed to finalize our wills before our first trip without our baby. What other milestones drive people to take action?
Terri: College expenses are significant. Over the past 30 years, tuition for public four-year institutions has surged by 213%. Many don't have these funds readily available, prompting them to plan while still focusing on their retirement savings. Life's unexpected events, like a death or divorce, can also trigger immediate financial action.
Jean: I've experienced those situations myself.
Terri: In divorce cases, financial firms often notice changes first. Many women aren't as involved in the financial aspects as they should be, leading to complications with assets, taxes, and necessary updates to wills and trusts.
Jean: That sounds stressful.
Terri: Exactly. This stress emphasizes the need for women to engage with their finances proactively, whether facing a divorce or the passing of a partner. Planning ahead can prepare them for predictable and unforeseen life events. Our 2019 survey indicated that only 24% of women have a written financial plan, indicating a significant opportunity for improvement.
Jean: Can you elaborate on those unpredictable events?
Terri: Moving is a common life change, occurring on average 11 times per person. My husband and I have moved eight times! Each move carries substantial financial implications, such as buying and selling homes, job changes impacting retirement plans, and adjusting insurance. Even minor expenses, like outdoor furniture needs, can accumulate and strain budgets, leading to potential credit card debt.
Jean: You're highlighting how these events can influence overall finances. How should one initiate their financial planning?
Terri: Begin as early as possible; the sooner, the better. For instance, my son graduated college recently, and we gifted him a financial plan. He'll tackle it step by step, starting with budgeting and cash flow, learning to manage his salary while saving.
Jean: That's a thoughtful gift. I wonder how many parents think to offer something like that.
Terri: I didn't start as an executive. As a CFP, I witnessed firsthand the challenges families face without a solid financial plan. Our 2019 survey revealed that Millennials and Gen Z feel pressured to overspend on experiences or items influenced by social media. It's our responsibility as parents and financial advisors to guide them. The financial industry must simplify investing and planning, ensuring it's accessible and affordable to meet the expectations of younger generations.
