Developing a financial plan is the best way to work towards achieving your goals. Financial planning is the process of preparing a comprehensive statement of the long-term goals for your security and well-being, and developing a savings and investing regimen to achieve those goals. Financial planning is not a one time exercise – as your needs change, so will your plan. Most advisors recommend that you review your plan at least once a year, to see if any alterations need to be made and take any corrective measures if required. Apart from this, there are some events, after which you definitely need to consider reviewing your plan.

• Change in your income:

A hike in your salary is an annual event that is generally taken into consideration while preparing your financial plan. This increment is usually accounted for in your yearly review, by tweaking investments where necessary. But there are other cases when your income can change drastically – like a pay-cut, promotion, change of job, job loss, long sabbatical, etc. In these cases it is important to review your financial plan to reorganise your affairs to account for the difference. 

• Reorganisation of your goals:

Articulating your goals is the first step towards creating your financial plans. However, your goals are not static and will possibly change over time, as your lifestyle changes. So in the event that your goals change, you will need to make the requisite considerations within the scope of your plan. These could be reorganisations like wanting to buy a bigger car, an independent house instead of an apartment, chasing higher returns or even wanting to invest more towards your retirement. Regardless of the change, make sure your plan reflects your new outlook.

• Occurrence of a milestone event:

Marriage, buying a home, the birth of a child, childrens schooling and higher education or their marriage and so on, are few of the key milestone events in most people’s lives. In such cases, your priorities will change as you are not just planning for yourself anymore; you will need to think about the people who are dependent on you as well – your spouse and children. Apart from just reorganising your investments, you will also have to think about increasing your insurance coverage to include your dependents and undertake estate planning. 

• Taking out a large loan:

Most people take a loan towards an expensive purchase like property; or for other reasons such as education as well. Sometimes, the parents may be co-borrowers on their childrens’ education loans – which can be a huge liability, especially if your child is studying abroad – and may become your burden to pay back if they don’t secure a job. It is absolutely necessary for you to review your financial plan before opting for a loan, as you need to know if you will have the necessary finances to pay off the EMIs and help you be prepared for the worse.

• Diagnosis of a life threatening disease:

Regardless of how healthy a lifestyle you lead, and no matter how many precautions you take, there is a chance that you can get diagnosed with a life threatening disease – cancer for example. The treatment for such conditions is expensive and can lead to mounting medical bills, and your general health insurance might not cover everything. Apart from this, diagnosis of such diseases may also impair your ability to work as usual and could in turn, affect your income. Whether it is to restructure your investments or rethink how you use your money, diagnosis of a life threatening disease is a scenario when it is imperative to review your financial plan.

One final thing to remember is that the process of financial planning can be an extremely complex activity for someone, without the right skill set. So when it comes to creating or reviewing your financial plan, always work with a certified and experienced financial planner, who can guide you through the process efficiently.