Why should you carry out a financial review?
Financial plans often contain medium and long-term goals, whether that’s for your retirement or your children’s university fees, but that doesn’t mean you have to stick to these for the rest of your life.
Circumstances can change considerably over time, you may get a big promotion that increases your income, or you might be just starting a family and your priorities have changed.
There are also factors outside of your control that can impact your finances and investments, such as rising interest rates and inflation.
With all the above factors in mind, periodic financial reviews are useful to identify where your money is working hard for you and where it is letting you down.
Maximise opportunity and minimise risk
Reviewing your finances allows you to make informed, proactive decisions about your strategy, so you can keep on track and continue with the lifestyle you want whilst still reaching your long term goals.
As we’ve already said, a lot can change from when you first drew up your plan, especially the longer you leave it to review. One big change to look out for is the level of risk you’re exposed to, being aware of these means you can take any necessary steps to protect your assets mitigate any of these risks.
Similarly, without a review you could be missing out on new opportunities to grow your wealth. It’s important to stay up to date with these and optimise your investments where possible.
It’s also not an effective strategy to make a plan and then assume you will meet all your targets (you know what they say about assumptions!). It’s vital that you asses your progress to determine if you’re on track and if the goals are realistic, and if they are still a priority for you.
If old goals are no longer a priority, a revised plan will mean your money is working harder towards what matters to you most.
What exactly should you be reviewing?
Household budget
What does your day-to-day income look like? Are there costs that could be trimmed and resources that could be used more effectively?
Debts
You must make sure you get to grips with any outstanding debts, such as mortgages and credit cards. You can use your strategy to prioritise repaying debts to put yourself in a stronger financial position.
Investments and savings
With the investment market constantly fluctuating and pension/savings rates changing, keeping a close eye on these can help you decide whether you’re maximising opportunities and managing risks effectively.
Estate planning and inheritance
A review can highlight any steps you need to take to make sure your assets are protected and distributed as you wish further down the line. You may also want to take a look at what you had already stated in your will or draw one up if you haven’t already.
Insurance and protection
Income protection, life insurance and home insurance could all have a huge impact on your finances should you ever meet them. That’s why it’s important to check you have the best policies that fully reflect your needs.
A financial review puts you in the driver’s seat, you have the power to make the right decisions at the right time, keeping on track to hit your targets.
WE are here to help
It can be overwhelming as there’s so much to review, that’s why we’re here to guide you through the process. So, if you’re looking to freshen up your finances, get in touch with one of our advisors here.
If you’re still not convinced on why you should review your plans, take a look at one of our recent case studies here, where our annual review saved this client from running out of money!
