Life's Financial Turning Points

All of us experience financial turning points or financial milestones in our lives. But the way we deal with them obviously differs widely.

Financial turning points include beginning a first job, leaving our childhood home, getting married, having children, losing a job, buying a first home, getting divorced, suffering a serious illness, and retiring. The list goes on.

High on the list of ways to help prepare for expected and unexpected turning points are careful budgeting, saving, investing and seeking quality professional advice when necessary. In other words, it is a matter of following the fundamentals of sound personal financial management.

ASIC’s personal finance website MoneySmart recently updated its feature Life’s events, which provides valuable tips about how to cope with these milestones. A core theme running though its tips is the importance of budgeting. (See MoneySmart’s online budget calculator.)

Interestingly, the Your Money section in The New York Times recently published a series of essays under the headline My biggest financial lesson. In the essays, the authors discuss experiences in their lives that crystallised their attitude to money.

These experiences led to these individuals to think differently about saving and spending money, writes personal finance columnist Ron Lieber. Indeed, these financial lessons have turned into financial turning points in their lives.

The life-changing money events outlined in the essays include:

A middle-aged singer/songwriter suddenly having to consider buying her first home when a landlord gave her notice to either buy the house she was renting or move out. This led her to the "daunting" challenge of buying her first home.
A grandfather who "through decades of being an example of sound financial thinking, he had taught me [his grandson] how to save, spend, give and think about money…" Later as a financial journalist, his grandson would recognise the same attitude to money among the truly wealthy.
A 93-year entrepreneur advising a 54-year-old with inadequate retirement savings about the basics of keeping costs to a minimum and the need to be cautious of debt.

These financial lessons may seem extremely simple but can make a significant difference to our financial wellbeing and to how we handle life’s financial turning points.

Robin Bowerman is Head of Market Strategy and Communication, Vanguard Australia.

As a renowned market commentator and editor Robin has spent more than two decades writing about all things investment.

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