Money Needs and the Family Life Cycle

When it comes to the future, many people wish they had a crystal ball, especially when money comes into the picture. Since crystal balls are hard to come by, University of Florida researchers say to look at the “family life cycle” to help predict future costs.

The family life cycle is a sequence of events that makes up a family’s pattern of development. It begins with marriage and includes other events such as the birth of children up to retirement. By knowing what usually occurs during various stages in the cycle, people can anticipate what their money will be used for and plan ahead.

The cycle begins with marriage, a time when couples need furnishings and household equipment, but have little income. Also, many couples begin to look at having a home of their own. When children come into the family, costs can also increase if one member of the couple takes time off of work to care for babies. Medical costs, along with insurance, can go up as well. Additionally, if one member of the couple stays home to raise children, there’s a loss of income. If both parents work, costs are incurred for day care. By this stage, families also usually have payments to make on a number of items, such as a home and cars.

Bigger changes still lie ahead as families put children through college and then adjust to their potentially empty nests and retirement. When families spend time talking about and planning for the financial responsibilities that are typical of each stage, they can make smarter financial decisions based on the needs of the family life cycle