Chapter 17, Problem 8DC1

Summary Introduction

To determine:

Importance of having sound financials if divorce takes place.

Introduction:

Important events of life are getting started in life. These are the important events where the planning of finances is very important. Planning of finances refers to the planning for future and makes the days comfortable in life. It involves the management of income which you earning right now and planning the savings so that the future is financially safe.

The ten important life events are as follows:

• Starting of financial life:

  This is the commencement of financial future. It includes the future planning and designing the layout of life.

• Marriage:

  Life could already be having loans at this point of time. Marrying means carrying their loans too. Hence the planning of payments of these loans is important.

• Having a child:

  New family member increase the expenditure of home and to overcome those financial planning is important.

• Buying a home:

  It is an important life event to reside in our own home, which involves a huge investment and hence the planning for the same is important.

• Unexpected money, inheritances etc:

  These types of events bring extra tax liability. Thus planning for taxes has to done to overcome these events.

• Illness:

  Planning of finances has to be done for the contingencies like serious illness which can come at anytime in the life.

• Death of spouse:

  this event makes an individual alone. Planning of finance is important and could help the other partner to come out of this trauma.

• Taking care of elderly individuals:

  The planning of health and the expenses for medical treatment of individual’s parents has to be planned in advance.

• Divorce:

  This is another traumatic event which can happen in an individual’s life and one should be prepared financially for it.

• Retirement:

  Pension plans and retirement plans should be made ahead of life so the life after retirement can be spent peacefully.