Caring about your health is very much like caring for your financial plan. Quite like your annual checkup recommended by your doctor, your trusted financial adviser recommends an annual assessment of your financial plan.  

Think of your financial plan as your road-map, needing to constantly refer to it to stay on track in order to achieve your financial goals. Your financial plan needs to be planned according to current standards of living, considering your assets and liabilities. Therefore, a yearly review is essential to assess your progress made towards achieving your financial goals.  

Here are a few milestones that make a financial review necessary:

• Starting a family 
• A new job or promotion 
• Loss of a job 
• Buying or selling a property 
• A significant change in health status 
• Death inheritance  
• Getting married/separated/divorced  
• Achieving a financial goal such as paying off debt or acquiring a new asset 

What to Consider When Reviewing Your Financial Plan 

Standard of living 

Your standard of living will have a direct effect on current expenses and savings. This determines how you will achieve your financial goals beyond your years of earning. 

In order to maintain a certain standard of living, it is important to ensure that your standards remain constant with the income being earned for an individual to live the same way during the golden years, better known as retirement.  

Goals 

Your priorities will likely change over time. For example, being in your early 20’s, your priorities may include going on vacation and spending on your lifestyle. However, these spending habits may change should you and your partner decide to start a family.

A good financial plan includes long-term and short-term goals. A long-term goal could be planning for retirement, whereas a short-term goal could be saving towards a mortgage bond.

It is also important to have an emergency fund for a rainy day or unexpected expenses incurred, such as falling ill and needing to see a doctor or being hospitalized.

Income and expenses 

Having a complete understanding of your cash flows, that is, where the money is coming from (income) and where it is being expended to (expenses), is important. This will guide you on how long your income (or what is left after expenses) will last for the remainder of the month. Therefore, being able to differentiate between one-time, temporary and recurring income can help prepare a budget based on your past finances, giving you a clearer picture of what you could potentially save.

If your income consistently exceeds your expenses, this means it’s time to revisit the plan. However, it is also important to consider inflation during any financial plan.  

Change in Risk Appetite (Level) 

Risk Appetite frames your financial plan, therefore a change in risk can have either a positive or negative effect on meeting your goals. For example, a young investor would be willing to take more risk, but as you reach retirement years, your risk level might be lower.  

An annual or bi-annual review increases the possibility of fulfilling your financial goals, by incorporating personal or economic changes in your plan.   

The Importance of a Financial Review 

There could be a possibility a fund you’re invested in isn’t performing well. This is the importance of a financial review; it allows your financial adviser to analyse your investments and determine if they are worth keeping and suitable to your current financial evaluation.

Contact your trusted adviser to schedule your annual quarterly review. 

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