Financial Considerations
Your financial needs evolve as you age, grow your income, assets and family, take on new debt or a new job, etc. This series will follow sample profiles to get a feel for the financial needs at various stages of life.
Jane is 25 years old. She is young, healthy and will be a successful professional upon graduating residency. She has invested a lot of time, effort and money into her future. With graduation, a wedding, and a new home on the horizon, she needs to start thinking about her financial health.
Build an Trusted Team of Advisors
Throughout her career, Jane will require an insurance advisor, investment advisor, wealth manager, accountant, banker and a lawyer. It is important to find professionals that you like and trust, as you may be working with them for the duration of your career and they will assist you in making important financial decisions that will help set you on your path to financial independence.
Disability Insurance
Once Jane has chosen her insurance advisor, her first priority is to secure disability insurance. There are many insurance offers available to professional students that will save her thousands of dollars over the course of her career. In addition, her earnings potential is her greatest asset and needs to be protected in the event of an unexpected illness or injury.
Getting disability insurance ASAP is also very important when medical questions are required. A small blemish in your medical history could impact how the policy is issued.
Life Insurance
Jane’s parents have co-signed her $100,000 loan which will make them liable for the debt if Jane were to pass away. Term life insurance is very inexpensive and will protect her parents from this liability.
Jane and her fiancé may also rely on each others income to sustain their current lifestyle. When another individual relies on your income, or vice versa, it is time to get life insurance.
Health Insurance
Jane will lose her health insurance upon the completion of her residency. Health insurance helps to cover prescription drugs, medical supplies, paramedical practitioner fees (such as physical therapy, registered massage, etc), vision, and dental. If Jane’s fiancé has health insurance and they have been in a common-law relationship for a year or more, she can be added to his plan without answering medical questions if done within 30 days of losing her coverage.
Financial Planning
Jane has a some large monetary goals in the short term - financing a wedding, a down payment on a home, and chipping away at her debt. Organizing those goals and understanding realistic timeframes and upper limits is very important so you do not overextend yourself. A financial planner will help determine how much money you are bringing in, what is required for your basic needs, what is left over to meet your goals, and the best way to accomplish it.
Prenuptual Agreement
Depending on Jane and her fiancé’s personal and/or family assets, inheritance, family obligations, business ownership, and debts a prenuptual agreement may be recommended. It is a personal decision that should be discussed openly together and with the guidance of a lawyer.
Wills and Powers of Attorney
Jane and her fiancé need to put wills and powers of attorney in place to help protect their interests and ensure their wishes are carried out during their lifetime and after their death.
A will is a legal document that outlines your wishes regarding the distribution of your assets, who is responsible for managing your estate, and the appointment of guardians for minor children. A power of attorney grants somone the authority to act on your behalf in legal, financial, or health related matters.
If you would like to review your personal financial situation, connect with one of our trusted advisors using the link