Realising the importance of investing, individuals make a financial plan to help them achieve their goals. However, they often stop at that. You must realise that financial planning is a continuous process which involves constant review and re-evaluation when required. It might also need you to consider different investment options and types of investment. Let’s understand four times when you should review your financial plan:
Your income level changes
Salary hike is often an annual event and should be ideally taken into account while you do your financial planning. So, it makes sense to review your financial plan at least once each year when you experience a surge in your salary and make minor nips in your investments.
But there are other significant events such as change of job, long sabbatical, promotion, early retirement, job loss, etc. Your income is likely to change considerably during such events. Under such conditions, your financial plan ought to need a review. As much as you should ramp up the intensity of your investments during a salary hike or promotion, you might want to scale down your investments during testing times.
Undergoing asignificant milestone event:
Some of the significant milestones events in an individual’s life are starting a new job, buying a house, marriage, birth of a child, retirement, etc. During theseoccasions, as our priorities change to quite some extent, you may want to review your financial plan to add or subtract certain financial goals.
Availing for a largepersonal loan
The one instance where it is utterlyessential to review a financial plan is when an individual opts for a loan for a big purchase like a car or property or home. You should diligently review your portfolio before and after applying for a loan.
Now, before availing a loan, an individual should analysetheir assets properly to evaluate how much they would like to cash out for the down payment. Further, as the EMI begins, one should review their financial portfolioagain to apprehendthe amount that could be used for other financial goals. This is because your expenses are bound to increase owing to the loan.
Detected with a life-threatening disease:
Life is quite uncertain, and even the healthiest and the most careful people could be diagnosed with the deadliest diseases. For instance, for multiple sclerosis or cancer, nobody is aware ofthe cause or how it could be prevented.
What’s more, the treatment of these diseases is quite expensive. Also, being diagnosed with such a condition might entail the individual in changing theirhabits and lifestyle that could include scaling down on working hours. This may lead to loss of income or less income.
During such pressing times, it is crucial to review your financial plan every now and then to alter a few financial goals. For instance, let’s assume you have been saving for a vacation, but considering your health, you might consider stopping it temporarily. Instead, you could save that moneytowards creating an emergency fund for any medical treatment or emergencies.
A financial plan should be made, considering your current financial situation. Also, remember that with time priorities in one’s life often changes. These are the times when one should re-evaluate their financial plan and make the required adjustments. This will ensure that you aren’t financially stressed. Also, it will help you to achieve your life goals promptly. Happy investing!
