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When to Review and Update Your Financial Plan

Your financial plan is a personalized playbook that outlines the steps you’re taking toward a solid financial future. When the time comes to buy a home, start a family or retire, you’ll want to be sure you can act on those goals. If it’s been a while since you last looked at your personal financial plan, it’s time for a review.

How Do You Make a Financial Plan in the First Place?

If you’ve never made an official financial plan, no problem. At its core, think of your plan as your wealth-building strategy. Here are some common elements to include in your financial checklist:

  • Financial goals (short-, medium- and long-term)
  • Budget and cash flow predictions
  • Net worth calculation
  • Debt management
  • Estate planning
  • Insurance coverage
  • Retirement strategy

How Often Should You Review Your Financial Plan?

You should review and update your financial plan at least once a year. This is the time to ensure that the financial aspirations you started with are still relevant. If not, you can reset your goals. That’s not to say your plan can’t shift between annual reviews, though. After all, life happens. You might get a new job making more (or less) money or lose a spouse or partner. Major life events are good reasons for a financial checkup even if it’s been less than a year from your previous review.

What Should my Financial Plan Review Include?

A financial planning review includes an assessment of your current financial situation, your financial goals and what steps you’ve taken to achieve them. For instance, your budget will reveal details like how much you need to get by every month, how much you can put toward paying down your debt and how much you can invest and save for the future.

Create short-, medium- and long-term goals. If you want to save for a big vacation in the next year, buy a new car in five years or fund your child’s college education in 15 years, you need to include a set of clearly defined savings steps and attach dollar amounts to them.

Life insurance policies and estate plans are often overlooked in a financial plan, but they shouldn’t be. Both ensure your family is provided for after you’re gone.

And don’t forget to calculate your net worth during your annual review. Net worth is a simple calculation of your assets (what you own) minus your liabilities (what you owe). A positive net worth means you’re on the right financial track. A negative number means you need to prioritize reducing your liabilities to get to a positive net worth.

Help From a Professional

Keeping your financial plan up to date delivers peace of mind now and for the future. If you’re looking for a professional you can trust with personal financial planning, Farm Bureau can help! Connect with one of our experienced financial advisors for help getting started.

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