A great financial plan is like a roadmap: it can equip you with a strong sense of direction, and a clear overview of the steps you need to take between where you are and where you want to be. But as life changes, you’ll need to update your financial plan from time-to-time.
Like any good set of directions, though, your financial roadmap has to adapt to changes in the landscape in order to stay relevant and useful. That’s why if you’ve recently experienced any of these big life events, it may be time to reevaluate your itinerary…
Changes in Direction
When it comes to big life events, anything that sets you in a new direction can have a huge effect on your finances. Whether it’s a new job (lateral move, a new company, new career, etc.), relocation, going back to school or even remarrying, heading down a new path is a good reason to reevaluate your financial big picture. Make sure that your planning adapts to your new priorities and needs.
Dependents and Their Life Events
If you have children or aging parents, your financial planning may already be anticipating their upcoming milestones or needs (saving for their education, weddings, health needs, etc.). If their direction or preparedness changes, modify your plans accordingly. This may include updating insurance information, reallocating savings, or changing your investment strategies. Any changes affecting your children or loved ones are good reasons to re-appraise your finances to make sure that everyone is prepared.
Thinking of saving up for a big vacation or renovation project? Or maybe you’re thinking about investing in a second or third property? Your financial planner can help you adjust your savings plan to make room for these new projects and investments without compromising future goals.
Unexpected Expenses (or Surpluses!)
Saving for big projects may be something you can do without revising your investment strategy, but unexpected large expenses – such as health care costs or unanticipated repairs – may justify reviewing your plans. You may want to change the distribution of your investments to help you cover unexpected costs, or to give you more flexibility to use your savings now. Conversely, receiving an inheritance from a relative may warrant changing your investment strategies or contributions to include the additional income. Either way, your financial planner can help you adjust to new surprises as they pop up.
Planning Ahead & Anticipating
You’ve probably already started saving for retirement, but what about end-of-life care, or health care needs down-the-road? Big life changes may also affect your risk tolerance. Your financial plans should be responsive to these changes.
I’m a firm believer in financial planning that responds and reacts to your lifestyle as it changes. If you go through the work of building a strategy, make sure you’re also reevaluating to adjust or improve it as you go, so that the plan stays in step with your priorities. Ultimately, the goal is an effective plan that suits your lifestyle and grows with you.