Financial planning is an ongoing process that needs to shift and change in line with your life circumstances and decisions. In the same vein, a financial plan is not a once-off project – it is a road map for how you manage your wealth today and in the future. And that means it needs to be monitored and reviewed on a regular basis.
In general terms, you should review your financial plan once a year, preferably with the help of a trusted independent financial adviser (if you don’t have one already, read this). Unless an unexpected and life-changing shift occurs, this will allow you to take into account the common changes that happen as you grow older, move on in your career and acquire more wealth or responsibilities, and tailor your plan accordingly.
What to take into account when it comes to a review:
1. Events that might trigger a review sooner than expected. These include life changes like getting married (or divorced), having a child, inheriting an unexpected sum of money, moving to a new country or into a new role at work, and achieving a financial goals (such as debt settlement) sooner than planned.
2. Changes in income and expenses. Your budget has a large role to play in your financial plan. And this goes beyond your household budget to how you allocate funds in your savings and investment portfolios. As you go through changes in income and cash flow, adjustments might have to be made to your standard of living and financial commitments.
3. Defining long- and short-term goals. A solid financial plan takes into account your financial goals in both the short and long term. It’s important to review your goals regularly and monitor their progress, noting what obstacles are preventing you from reaching them within allocated timelines. Be flexible and don’t forget to factor in inflation as this will have a significant impact on income and expenses.
4. The state of your investment portfolio. Your investment portfolio should be reviewed more than once a year. Learn how it works and keep tabs on what is going on in the markets. Speak to your financial adviser about what you are investing in and why so that you can ensure you are getting the best possible returns. Take time to learn about the importance of investing, review the fees, performance and suitability of your investments in relation to your goals.
A review of your financial plan acts as a financial health check and can help ensure you are growing and protecting your wealth in the best possible ways. So it’s important to keep it up to date and to make changes as required. Need expert advice on how to best implement and manage a financial plan? The team at TRG can help! As independent advisers with expertise in insurance and investment, we are perfectly positioned to partner with you on your wealth journey.