It’s hard to believe, but more than half of 2016 is already in the books. The last few months have seen a crowded field of hopeful Presidential candidates narrow to just the party nominees; the Fed elected to not raise interest rates when many had expected such a move; and British citizens decided to leave the European Union in a historic Brexit vote.

With so much having already happened and so much still going on, it’s easy to forget to pause and assess how the year’s events—of both the global and personal varieties—may  may have affected your financial goals.

“Your financial advisor can help you stay the course when major events like Brexit occur,” says Eli Sallman, CFP^®, Assistant Vice President and Investment Portfolio Officer for the Trust Company, based in Manhattan, Kansas.

“Investing is all about patience and not trying to time the market. During times of uncertainty, we typically advise our clients not to sell out of all their positions because if you sell when the market is down, you lock in your losses and still won’t have recovered by buying in when the market is back up.”

 

Talking to Your Advisor Every 6 Months Can Save You Money

Aside from understanding how major political or economic events may impact your personal or business’ finances, it’s important to meet with your financial advisor regularly to ensure your finances are as they should be.

“Communicate with your financial team to make sure everyone is moving in the right direction and that nobody is making moves in direct opposition to what other members are doing,” says Eli. “If your professional advisors (financial planner, CPA, and Estate Attorney) are working together and have good communication flow, they can work more efficiently, which could lower the fees you pay them.”
 

Mitigate the Impact of Life Events

Like going to the doctor, an annual or semi-annual financial checkup helps protect the health of your finances. Events like marriage; birth or adoption of a child; job change; or a new home can impact your financial goals, so it’s always a good idea to talk about them with the members of your financial team.

Polly Reynolds, CPA, CTFA and Vice President and Trust Officer for the Trust Company in Columbia, Missouri, advises clients every day about how these common life events may affect their financial plans. “When people get married, I am always talking to them about their income. When people are single, their taxes are withheld based on what they earn individually,” she says.

“Once married, each partner having taxes withheld based on their respective earnings may not be enough to cover the total tax liability of both incomes, which may push them into a higher tax bracket. Making sure their tax withholdings are sufficient prevents them from incurring a penalty come tax time.”

Polly also talks with newly married couples about life insurance, plans for paying off debt, and having an adequately funded emergency plan. “Whether a person is married or single, he or she needs to have an emergency fund that contains enough money to cover three to six months of living expenses,” she says.

“If someone loses a job, they need to cover expenses and still live their life. Having an emergency fund in place prevents them from putting groceries and other expenses on credit cards that may sit there accruing interest for a number of months until they’re able to pay them off.”

Long-Term Financial Goals are Moving Targets

It’s important to consider how a life event affects long-term financial goals. You may want to develop new goals or alter existing ones. A job change can affect your retirement saving goals if your income changes drastically or if you invest in a 401(k) and then neglect to move it over after you leave, consolidate it under the care of one advisor, or rebalance it regularly.

If you are married and living in an apartment, for example, you may decide you want to buy a house; a financial advisor can help you figure out how to get into the kind of house you want, breaking down the overall goal into monthly saving targets. If you have a baby, you may need to alter the amount or type of life insurance you have or start putting away money for her future college education. “There’s no better time to start a 529 or UTMA account than when your children are small,” says Polly.

One of the tougher life events to handle emotionally as well as financially is the long term or critical illness of a parent. “Some will decide to quit their jobs to take care of the parent,” says Polly. “You have to be careful to think about the long term implications of that decision. If you have an emergency fund in place, maybe you can take a leave of absence from work and rely on those three to six months of living expenses to care for your parent, as opposed to leaving your job altogether and putting yourself in a situation where you become a burden on your children later in life.”

 

What Next?

This discussion merely touches the surface of how major world and life events may impact your financial goals and long term financial success. For a more scholarly take on the subject of market risk, see  “Investment Risk: A Deep Dive,” by Michael Carlisle, Vice President and Trust Officer in The Trust Company's Lawrence, Kansas office.

Remember that regularly scheduled meetings with your financial advisor can help you navigate the obstacles that inevitably will come between you and your goals. If you don’t have a financial advisor, contact The Trust Company today to get the conversation started.