6 Reasons to Review Your Financial Plan

Emphasizing the importance to “review your financial plan” is akin to establishing the need of reliable navigation system. Embarking on your financial journey without periodically reviewing your plan is like setting out on a road trip without occasionally glancing at your map or checking if the gas tank is full. It’s a recipe for uncertainty and unexpected detours.

Your financial journey is a dynamic one, influenced by changes in your life, the economy, and the investment landscape. Life rarely unfolds exactly as planned. That is why it is crucial to regularly review your financial plan. It is not about micromanaging every penny; it is about adapting your strategy to the ever-changing terrain of your life.

6 reasons to regularly review your financial plan

A comprehensive financial plan review not only helps in adapting to changing circumstances but also identifies potential risks and opportunities, allowing for timely adjustments that can safeguard financial stability and foster sustainable growth. The periodic scrutiny of a financial plan is not just a prudent exercise; it is a strategic imperative for those who seek to navigate the complexities of the financial landscape with confidence and resilience.

Right from the get-go, when you ‘review your financial plan,’ this regular pit stop ensures you are not veering off course and that your financial engine is running smoothly. Think of it as a GPS for your finances, constantly recalibrating your route to ensure you reach your goals. The need for ongoing financial guidance remains as important as ever. In this blog, we are going to explore 6 reasons why taking the time to review your financial plan is as essential as changing the oil in your car. So, let us hit the road and discover the key reasons to keep your financial journey on track!

Review of your expenses and Goals

  • Your financial goals and priorities may change over a period. Reassess and modify your goals as and when needed and communicate these changes to your financial planner.
  • Unexpected expenses, changes in income, or new life goals can throw your plan off course.
  • Over time, even subtle changes in spending habits, investment performance, or priorities can cause your plan to drift off course.
  • Regular reviews function as radar, detecting these subtle shifts and allowing you to make course corrections before your miles off track.

Regular periodic reviews to assess your progress

  • By comparing your current situation to your financial plan, you can assess your progress towards each goal. This helps you identify areas where you are doing well and areas where you might need to adjust your strategy.
  • Review your financial plan at least annually, to check whether you are on track to reach your financial goals and to understand any deviations if you have not implemented the plan as per the recommendations. Corrective measures need to be taken in case of any deviations in your asset allocation or financial goals.

Review after major life events

  • Life is full of surprises, some are expected and others not so much.
  • Major life events like marriage, the birth of a child, a career change, or early retirement can significantly impact your financial goals. Review your financial plan to adjust and review to accommodate these changes and ensure your finances remain on track.
  • Keep your financial planner in the loop about any changes in your life, career, or financial objectives.

Changes in market circumstances or investment instruments

  • The financial landscape is constantly evolving, and new opportunities may arise that were not present when you initially created your plan. Review your financial plan to adjust to these realities.
  • What might have been a sound investment strategy a year ago may not be the best choice today. Regular review of your financial plan will ensure that your investments are aligned with your current financial objectives.
  • Keep an eye on economic and market changes that may impact your investments.
  • Adjust your financial plan accordingly to align with your risk tolerance and market conditions.

Updates in Tax Laws

  • Changes in tax regulations can necessitate adjustments to your financial plan.
  • Review your financial plan to understand how the specific tax changes announced in the recent budget or other government pronouncements will affect your tax liability, investment returns, and overall financial goals.
  • Focus on changes that apply to your income bracket, investment choices, and deductions you utilize and assess their impact on your existing financial plan.
  • For example, the recent changes in the Indian tax slabs under the new regime have made it more attractive for High-Net-Worth Individuals (HNIs). Hence you can use the income tax calculator provided by the income tax department to choose the favourable tax regime.
  • Also, the recent changes in debt mutual fund taxation in India i.e., the removal of indexation benefit for on debt mutual fund long-term capital gains (LTCG) has indeed impacted investors, now they need to pay tax on the entire capital gain on the debt mutual funds invested after 31/3/2023 at their income tax slab rate, which will potentially increase their tax liability.

Be Pro-active and don’t hesitate to ask questions

  • Waiting for a crisis to address financial issues is like driving with low oil pressure – risky and potentially disastrous. Reviews empower you to identify and address potential problems before they snowball, giving you peace of mind and control over your financial future.
  • Do not be shy, be proactive and reach out to your financial planner if you have any concerns.

Seeing your progress and adjusting as needed can help you stay motivated and committed to your financial goals. Knowing you have a plan and are actively working towards it can be very reassuring. Remember, your financial plan is a living document, not a dusty tome locked away in a drawer. Regular reviews are the key to keeping it relevant and effective, ensuring you reach the financial summit with confidence and peace of mind.

How often should you review your financial plan?

The ideal frequency depends on your individual circumstances and the complexity of your plan. However, a good starting point is to schedule reviews:

  • Quarterly: For those with dynamic financial situations or high-risk investments.
  • Biannually: For individuals with a stable income and moderate risk tolerance.
  • Annually: For those with a well-established plan and low financial volatility.

Remember, the key is to be proactive and consistent with your reviews. Do not wait for a crisis to prompt you to take action. Set aside time and review your financial plan like important appointments and treat them with the same seriousness you would any other commitment to your financial well-being.

By incorporating regular reviews into your financial planning process, you are not just ensuring your financial security, you are investing in your future self. You are giving yourself the power to adapt, adjust, and ultimately achieve your financial dreams, one well-timed review at a time. So, grab your financial compass, fire up your review engine, and get ready to navigate the journey towards your financial goals with confidence and clarity.

By taking a proactive approach to financial planning, you can navigate the complexities of the Indian financial market with confidence and achieve your long-term financial objectives. So, take control of your finances today and Book a free consultation call to unlock your brighter financial future!


On Key

Latest Blogs

Subscribe to Newsletter

Get our latest works directly to your mail box