Empty Nest? | Organize Your Finances to Pursue New Interests
Having a child is a life changing event. So is having a child leave home. Being mindful of what you are feeling and the impact that it is having on your mood and your day-to-day activities is important during any major transition. Finding positive and healthy ways to manage your time like exercising, taking a class or simply doing something that you love can help improve your mood and allow you to make the transition with greater ease.
Some of the new opportunities people choose to pursue after their children leave home may be something as simple as reading a book, learning to sew, or doing some volunteering. However, many empty-nesters choose to take the vacation of a lifetime, further their education, or start their own business.
Revisiting your Financial Plan
If any of these bigger challenges sound appealing, then you need to make sure you have the finances in place to support your dreams. It is also important to understand which accounts you may want to use to fund certain activities so that you avoid overpaying taxes. Consulting with a financial professional about how to withdraw assets to minimize your tax burden is advisable when making any major purchase or investment.
Many of the assumptions underlying your financial plan may now be obsolete. College tuition payments may be over. You might have more living space than you need or want. You have more time to travel and pursue hobbies. Spending some time thinking about what you'd like to do next can help you determine what you'll need to do with your finances in order to facilitate those goals.
Planning for Retirement
Kids leaving home is also a great opportunity to straighten up your finances in anticipation of retirement. For instance, many women empty-nesters focus on paying off any outstanding debts, such as their mortgage, to reduce their monthly expenses. Equally, many choose to pay additional sums into their retirement accounts to give them a boost before they start withdrawing from it.
The most important thing to do if you find yourself in this situation is to draw up a list of financial goals. This will help focus your mind on what you're looking to achieve.You can then break down your finances as they currently stand, to take a view on where your spending can be adjusted to help you save or pay off debt.
When planning for your financial future, you should also think about how your expenses would change if your child(ren) moved back in. Many youngsters today operate in a 'boomerang' fashion, in which they move out for work or education, but then move back home to save money for their first property purchase.
Consider whether you can afford to cover the cost of an extra person living under your roof again should they choose to move back in. Determine whether or not you need to charge them rent. This may also be a question of wanting to charge them rent; to convey the message that contributing to the home in which they live, as an adult, is important. As much as you want to help your children out, it should not be at the cost of your own financial security.
After many years of caring for your child(ren) now can be a time where you have the opportunity to focus on you. Though this can evoke feelings of discomfort at times, it can also help you rediscover the things that make you happy beyond being a parent and caregiver. Having a plan to make these discoveries can help you feel more comfortable with your newly found free-time. If you need assistance with this or any other life transition, Northstar Financial Planning specializes in financial life planning for women in transition. We are here to help you plan for your future wealth and well-being.