When should you consider revisiting your financial plan?
You dream, you plan for it and you achieve it. This is one of the main intentions of financial planning, not just to put forth financial goals, but to try and achieve them with various strategies, right from investing to managing risks. However, there may be some situations when you feel the need to revisit your financial plan. Given below are some of the situations when you should think of reviewing your financial plan.
1. Family events
During you lifetime, you may come across many good situations which may bring joy in your life or bad situations which may make you unhappy. Good situations such as the birth of a child, children’s graduation, children’s marriage, etc. can bring happiness in your life. On the contrary, situations like demise of your dear ones can make you sad. But whether it is a good situation or a bad situation, there are high chances of your cash flows getting impacted. So, you should consider revisiting your financial plan and account for the financial disruption and make necessary changes.
2. Change in income
Like family events, a change in income will not require you to change the core of your financial plan. Rather, the change will be more in the form of actions you need to take in terms of insurance or in terms of investments. However, this activity would require you to revisit your financial plan. A change in income does impact your financial plan. For example, if your income has increased and you have a loan which you wish to foreclose, it would have a positive impact on your overall financial plan. As against this situation, if your doctor has recommended your spouse to have a complete bed rest due to certain medical issues and the work profile of your spouse is such that he/she cannot work from home, then there is a possibility that your income may fall temporarily. However, you need to account for this and postpone the financial goals which are your wants and not needs to some future date.
3. Home Loans
Everyone wishes to own a home in life and when it is your first home, you do not want to compromise on anything. However, buying a home is a big ticket purchase which is often financed by taking a loan from a bank or a NBFC and you repay the loan in monthly instalments. So, when you take a home loan, there are high chances of a change in the overall cash flow, with a reduced investible surplus. In this situation, you need to relook at your financial plan and make the necessary adjustments.