Are You Due for a Financial Planning Review? How to Update Your Financial Plan

Jul 14, 2023 3 min read

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.

If you’ve never made an official financial plan, there’s no better time to begin than now. 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

Prepping for a Personal Financial Review

Once your plan has been put into place, it’s a good idea to consider how you’ll measure its success in the future. Keep these questions in mind as you decide how and when to review your plan.

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. If you’re planning for a year-end review, remember to give yourself some breathing room during the busy holiday season and opt for a review in September or October. That also gives you time to make changes to your investments before the end of the tax year.

How Do I Conduct My Financial Plan Review?

A financial planning review includes an assessment of your current financial situation, your financial goals and what financial decisions you’ve made 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.
  • Identify areas with potential for savings. When you examine your spending habits through a big-picture lens, it can be easier to see where your money is going. Do you have unused memberships or subscriptions? Are you utilizing things like healthcare savings accounts, and if so, are you setting aside enough to cover health and wellness costs? 
  • Asset location strategies allow you to choose which assets to keep in your tax-advantaged accounts and which to leave in your taxable accounts. Taxes should never be the primary driver of your investment strategy, but improving your tax awareness may lead to better returns.
  • 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. This is a good time to double-check that the people in your estate plan know about it, that all your accounts have the appropriate beneficiaries and that your will, healthcare proxy and power of attorney are all reflective of your current wishes.
  • Investment portfolios should be reviewed for diversification. The goal of diversification is not necessarily to boost performance — it won't ensure gains or guarantee against losses — but once you target a level of risk based on your goals, time horizon and tolerance for volatility, diversification may provide the potential to improve returns for that level of risk.
  • 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.
  • Consider your legacy. As you age, your financial plan often becomes more about what you hope to leave behind. Think about how your plan will affect loved ones after you’re gone, and whether you’d like to give to any charitable causes. 

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.

Neither the Company nor its agents give tax, accounting or legal advice. Consult your professional adviser in these areas.

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