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Why Do You Need To Review Your Financial Plans Regularly?
Today, to ensure that we remain in the pink of health, most of us get a medical check-up from time-to -to time. Similarly, we also get out valuable assets like cars, electronics, etc. services at least once a year to make sure that they function well.
However, what many of us forget is that the same rule also applies to our financial plans. Without a regular review, your financial plans may not deliver the desired goals. Hence, you must review your financial plans at regular intervals to ensure that you remain on track towards achieving your financial goals. This will also help you adapt your plan as your circumstances change.
When Should You Need To Review Your Financial Plans?
This would largely depend on your circumstances. Ideally, you must review your financial plans at least once a year. You should also review your financial plans in the event of any major personal or financial development in your life. These events could include changes in income and expenses, changes in your family like marriage and the birth of kids, change in your risk-taking ability, etc.
These changes can affect your life significantly. Hence, your financial plans may also change as your personal circumstances change.
When Should You Consider When You Review Your Financial Plans?
When you review your financial plan, you will need to consider the following areas in your life:
Goals
While preparing a financial plan, you define certain goals that you wish to achieve within a given time frame. For example, you could be saving to buy a house, or for higher education. Based on your ongoing conditions, you may need to revisit these goals after a certain point. With time, your financial goals may change, and these changes must reflect in your financial plans as well.
Income
There will be situations when you may receive a raise in salary. Any major change in income can directly impact your financial plans. An increase in income may not only lead to the early attainment of your goals but it also lets you dream for bigger goals. In such cases, you must review your financial plans to revise your savings and investments based on your revised salary.
Expenditure
No doubt, with changes in personal situations and an increase in income, your expenditure may also increase. Hence, you must consider the revision in expenses while reviewing your financial plans.
Liabilities
While planning your finances, you must ensure that you are working on reducing your liabilities. And as your liabilities reduce, you can consider increasing your investment amount while reviewing your financial plan.
Emergency planning
You may have built an emergency fund big enough to deal with an emergency at your last financial plan review. However, you must check if this fund is enough as per your current situation during your next review.
Assess Assets
While reviewing your financial plan, you must look at the assets you have invested in and assess if they are performing as per your expectations. During this assessment, you may want to re-balance certain assets based on their growth.
Want to learn more about financial planning? Here are .
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Image and article originally from www.bqprime.com. Read the original article here.