LifeStage Series: Growing & Expanding Families

Often, when we meet clients that have entered the “growing family/expanding household” stage, they articulate that it feels as if life is speeding up (and passing by quicker!). Because attention is on the day-to-day and energy is often at a premium, it is harder to focus on long-term planning. Hopefully, if building blocks have been put into place during the “early adult” phase, we can put some things on auto pilot.

For example, we encourage clients at this stage to take advantage, when possible, of automatic 401k sign up or automatic yearly increases (allowing them to increase their saving without even thinking) and to consider setting up some sort of automatic re-balancing on their investment accounts.

Of course, this is also a time when attention needs to be paid to budgeting on some level, as often expenses are going up and sometimes adjustments are being made to work/family life balance. We encourage people to think of budgeting as a way of understanding where their money is going, not something that is just meant to restrict or punish. Developing a healthy relationship to spending tracking and spending goals is vital at this stage to ensure plans stay on track long-term.

This is also often when near- and mid-term goals become more real, such a buying a first or bigger home or beginning to save for children’s educational expenses. Because the time horizon for these goals is shorter, it is important to spend time thinking through what exactly it is you are shooting for: what size and type of home will fit your family both for the near- and longer-term and how much do you feel comfortable tying up in real estate; or how much of your children’s educational costs do you want to contribute to and how much will you ask them to participate; or do you want to tag educational savings as just that—solely for education—or do you want to build in some flexibility (e.g. using a 529 plan vs using a UTMA acct)?

And another focus should be on making sure we are protecting our ability to work towards those things, by looking at how to integrate life and disability insurance into our planning. The hope is that clients see this as time to begin to dream a bit and then put in place the plans to make those dreams come true.