Giving Financial Guidance to Loved Ones During Life’s Big Events

By Melissa Boyer, CFP®, RICP®

Senior Financial Advisor

September 26, 2023

It’s curious how certain times of the year are widely popular for certain life events.

For example, September through November are the most popular months to get married, with the bulk of the “I do’s” being exchanged in October. The busy baby season is July through October, with most of these bundles of joy making their appearances in August.

Looking back on your own life, perhaps the trends didn’t hold true for you. You may have been a June bride or groom. Or maybe your first born arrived in the cold of February. Regardless of when these events occurred in your life, reflect a moment and ask yourself: “Was I financially prepared? Was my family prepared?”

Fast forward to today. You have worked and saved. Financially you’re where you want to be or at least you have confidence that you are headed in the right direction. Your own wedding and babies are in the rearview and you have arrived, or are soon arriving, at the “dessert” time in your life, where the moments are truly sweet. Children are getting married. Grandchildren are having babies. It seems that life is coming full circle with the next generation of celebratory events. And with that, it’s time again to ask yourself, “Am I prepared? How can I help my family financially prepare?”

Certainly, the excitement and energy surrounding a wedding can be overwhelming and there is no way to fully plan for the range of emotions that come with the birth of a child. But there are ways to ready yourself and the next generation of loved ones financially for these life events.

Here are some thoughts to consider and share.

Engagements: The Prenup

The question has been popped and answered with an ecstatic “yes!” In no time, the flurry of pre-wedding planning begins. Doesn’t seem like the appropriate time to plan for anything to go wrong down the road, right? But it is.

No one goes into a marriage wanting or expecting it to fail. And although divorce rates in the U.S. are on the decline, 40-50% of marriages still end in divorce, having lasted an average of only eight years.[1] Regardless of your own experience with marriage (hopefully you defied the odds), the statistics cannot be ignored. Better to be prepared for the worst while hoping and working for the best.

Your loved ones may be uncomfortable at the suggestion of a prenuptial agreement (prenup), but it is a topic worth broaching with them. Explain that a prenup is not a harbinger of doom; rather it is a legal agreement that determines the property and financial rights (who gets what) of each spouse in the unfortunate event of a divorce.[2] Establishing a prenup is a good idea for everyone, but especially if:

  • One partner earns most of the income. A prenup can determine alimony limits based on the “bread winner’s” income as well as make sure the less financially set partner is protected. This is especially important if one partner intends to stay home with children.
  • One or both partners own a business. A prenup can prevent an ex-spouse from becoming an unwanted business partner.
  • One or both partners expect a future inheritance, significant income or possess family heirlooms.
  • One or both partners have large amounts of debt, including student loans. A prenup can make clear the financial rights of the person who is not carrying the debt.
  • One or both partners have children from a previous relationship. In the event of death or divorce, a prenup can ensure a partner’s assets go to their children and not the spouse or spouse’s children if any.

Hopefully logic can prevail when dealing with this sensitive matter of the heart and the discussion proves to be more informative and helpful than off putting.


Weddings: The Budget

Thus far in 2023, the average cost of a wedding was $29,000.[3] This hefty price tag means some young couples may run the risk of incurring significant debt to achieve the wedding celebration they desire. To avoid this kind of financial pitfall, advise your loved ones to:

  • Have an honest and open discussion with each other to determine what each wants the celebration to be like.
  • Establish a starting budget and then research options and details, such as location, size, and vendors. Advise them to listen, compromise and work toward a realistic final budget and stick to it.
  • Start saving as soon as possible, either before or soon after the engagement is official. Recommend they stash about 20% per person, per paycheck in a wedding/honeymoon fund.
  • Find ways to save money at every turn while maintaining the desired look and feel of the celebration. Encourage them to consider changing the menu, inviting fewer guests, or getting married on a Friday or Sunday, if possible, to help trim costs.

Perhaps you will be helping with wedding expenses. If that is the case, be prepared to:

  • Discuss the funding with your financial advisor. If you have not already set aside funds for a wedding, work with your advisor to determine the amount you can give, based on your financial plan.
  • Communicate the amount you are willing to contribute and stick to it.

Regardless of your financial involvement, weddings can be stressful. Planning ahead can mitigate that stress on you and your loved ones. By encouraging realistic expectations and a solid budget, everyone will be able to better enjoy the big day when it arrives.


Babies: The Planning

Parenting is a “job.” There is no way to fully prepare for the physical, mental, and emotional fortitude required to handle the many peaks and valleys that come along with raising children. Grandparenting is a bit different, however. Having the benefit of lived experience and the ability to look over the shoulder, grandparents are in a unique position to see what may be coming around the corner for their own children who are now raising children and to impart a little wisdom here and there, when advice is solicited.

Parenting styles may have changed since your “day” and your children will certainly have their own way of raising their families, but what has not changed is the fact that little bundles of joy are expensive and expenses increase exponentially as the child grows.[4] Advising your children on how to start planning for the cost of raising a family is a gift and your words just may be worth their weight in gold. Suggest they do the following:

  • Get a solid estimate on the medical costs for prenatal care and delivery. Between their insurance company, the obstetrician’s financial coordinator and the hospital billing office, they should be able to ascertain what expenses they will incur.
  • Contribute as much as they can to a Healthcare Savings Account (HSA), if available to them. Depending on what the plan allows, tackling birth-related medical costs with tax-free dollars from an HSA is an amazing benefit.
  • Don’t overspend on “stuff.” Looking back, did your babies need absolutely everything that was marketed to you as a new parent? Advise them to avoid the trappings.
  • Review insurance policies ahead of time. They need to make certain that the new items that come with a baby are covered under their home and auto policies. Encourage them to review or establish life insurance policies as well. While they are young and healthy, life insurance premiums are low and the policy can be cancelled if they determine they do not need it down the road.
  • Review or establish their estate plan. No one wants to think about their deaths when bringing a new life in the world. But that new life is the very reason to think about and plan for the “unthinkable.”
  • Start an education savings plan. It is never too early to begin saving for future educational expenses. In time, they may want to work with a financial advisor on this and other financial planning needs, but for now encourage them to research 529 investment plan options and establish an account.
  • Work with a tax professional to avail themselves of any child tax savings they may be eligible for.
  • Research and budget for childcare. Outside of housing and food, this is the biggest expense for families requiring it. Most families today are spending, on average, 27% of their household income on childcare.[5]

As Erma Bombeck said, “Grandparenthood is one of life’s rewards for surviving your own children.”

Life is full of many rewards and some of them come in the form of children and grandchildren. They are your legacies, a good chunk of your life’s efforts and purpose, walking around in the world. How lucky you are! And how lucky they are to have you – to advise them, to guide them, and when it comes to grandchildren, perhaps spoil them. Hopefully, when the time comes for weddings and babies, your well-intended counsel will be well-received and helpful, so there’s a little less stress and everyone can better enjoy these wonderful life events-most especially, you.

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