The 5 times when you should review your financial plan

Plans tend to become obsolete as soon as they are put on paper. Once you have a financial plan, don’t let it become stale. You’ll want to revisit your plan often, even when things in your life don’t seem hectic or hectic – in fact, I’d say those are the better times to sit down, give your finances your full attention, and do a thorough review.

But aside from that, there are other specific triggers in life that tell you it’s time to take a look at your plan, get familiar with it, and potentially make changes to it.

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1. Revise it when all is quiet, between life transitions

The key to successful financial planning? The planning part! You want to develop a process, system and strategy to manage your finances and achieve your goals before you have to make critical decisions. There’s no point in experiencing an event and then saying, “You know what? We should make a plan.

Be proactive. Even if you feel like you don’t have a ton of goals or a whole lot to do as soon as possible, put your financial plan in place, because the truth is, the best time to plan is always yesterday. The second best time is today. When things are calm and there’s no fire to put out in your financial life, that’s exactly when you want to create a financial plan because you have the energy and focus. to do it.

And then be sure to review that plan before embarking on a major transition, such as moving to a career you love but losing access to equity compensation in your current job, or reaching a major life milestone, which could be anything from marriage to merging finances. to prepare for retirement. This will help you stay grounded in your financial reality and allow you to make more informed decisions and choices during busy times or seasons in life.

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2. Revise it when you have a lot of goals to prioritize

Ladders lead into the clouds.

Most of us have a lot of things we want to accomplish. The problem? We also have limited resources, and there is not a lot of time, money and energy to devote. If you find yourself with an abundance of goals but little direction on what to do and when, revise your financial plan.

This can help you sort through your goals, prioritizing them based on the impact each may have on your finances both short-term and long-term. If you’re in your 30s or 40s, those goals might look like this:

  • Maintain an annual travel budget
  • Save for children’s school fees
  • Obtain a higher degree or change careers
  • Get closer to the family
  • Achieving Financial Independence at 55

In addition to reviewing your financial plan, it can also be helpful to remember your values. Prioritizing goals (or ranking them on a timeline to figure out what to work towards first) is a much easier task if you know what is more important to you and ensuring that your priority objective aligns with this core value.

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3. Revise it after finalizing major changes or transactions

I focus on working with clients in their 30s and 40s, and that means things are always changing. Between buying homes, starting businesses, growing families, and growing assets and wealth for the future, major life changes and major transactions are the norm in my clients’ lives.

Every time a change occurs, from a raise to a house sale, we want to gather new financial numbers and data associated with the event and use it to update the overall financial plan.

Whenever you encounter a big change in your own life, be sure to review your plan and keep it up to date with specific numbers. It’s usually easier to do once the dust has settled and the numbers are finalized, because you don’t have to guess or make assumptions. You know what they are.

Of course, this is more effective when you review your plan before you have gone through a major financial shift or change. You want to be proactive first and foremost – remember to go back to your plan and confirm its accuracy once all is said and done. Whenever you have the option to override a guess (such as your bonus amount may be or what you think you could net if you sold your house) with a fact, enjoy and update.

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4. Revise it when you have questions about what to do next

A woman with several question marks above her head.

In times of uncertainty, your financial plan can provide clarity and peace of mind. Presumably, you put your plan on paper in more stable and less emotional times – so taking the time to review this when things feel fragile or when you are in a heightened emotional situation can remind you of the strategic plan of action and rational to follow.

This is especially useful when uncertainty arises because financial markets are volatile. At times like these, most people want do something, anything, to address the discomfort that can come from watching your investment portfolio go on a roller coaster.

But if you have already set a plan and strategy, you should stick to it. Don’t let short-term events (especially when it comes to your investments) knock you off your long-term course. Ideally, you will have an investment policy statement as part of your financial plan, which will serve as a written reminder of what you are committed to. Review this, then follow the path it charts – rather than tinkering with your portfolio and deviating from your strategy.

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5. Review it at least once a year, on an ongoing basis

A person writes on a calendar.

I always say that a good financial plan is not a static document. Financial planning is a process you constantly engage in over time. Things tend to become stale the moment they are put down on paper, and this is only made worse by the fact that a defining characteristic of life is that it changes.

Each time your situation changes, it has the potential to upset your plan because it no longer accurately reflects your new reality (whether that change is positive or negative). This is why it is essential to review your plan at least once a year, to make sure the data you’re working with is accurate, your plan reflects your goals and priorities, and you’re clear on the action items you need to proactively manage over the course of six to 12 next few months to keep things going Track.

Financial planning is a process, and it is a process that requires proactivity to work well. While some of the other milestones listed here are good indicators that it’s time to revisit your plan, don’t wait for something to happen to take action. It means you are constantly on your heels, just trying to react to past events. Be proactive and fully engaged in this process if you want to fully use your money as a tool to live well today and plan responsibly for the future.

Founder, Beyond Your Hammock

Eric Roberge, CFP®, is the founder of Beyond Your Hammock, a financial planning firm working in Boston, Massachusetts and virtually across the country. BYH specializes in helping professionals in their 30s and 40s use their money as a tool to enjoy life today while planning responsibly for tomorrow.Eric has been named one of Investopedia’s 100 Most Influential Financial Advisors since 2017 and is a member of Investment News’ 40 Under 40 class in 2016 and Think Advisor’s Luminaries class in 2021.