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

It’s difficult to reach your goals without a plan— and that’s true of your finances, too. Your financial plan is a personalized playbook that outlines the steps you’re taking toward a solid financial future. When it’s time to act on some of your goals - like buying a home, growing your family or retiring, you’ll want to be sure you have the financial means in place. 

But financial plans aren’t just set and forget. You need to review your plan regularly — at least once a year — to make sure it’s in good shape. A financial plan review checklist will help you hit every category and make sure everything is in order.

If you realize that it’s been a while since you last looked at your personal financial plan, it’s time for a review. A Farm Bureau financial advisor can help, whether you created the plan with them or not. 

Your Financial Plan Review Checklist

You should think of your plan as your wealth-building strategy and make sure it contains elements that will help you in the short term and in the future. 

Here are some common questions to ask as you review your financial plan: 

• What are my financial goals? (Think in the short, medium and long term.)
• What’s my budget? 
• What’s my net worth? 
• What debts am I paying off? Are they being paid off in a timely manner? How can I manage my debt so it works for me? Can I re-finance any debts?
• Is my estate in order? Have I made a will and is it up to date? 
• What insurance policies am I carrying and are they sufficient for my current needs?
• What’s my retirement strategy? Should I be investing in an annuity?
• Am I doing all I need to do to move myself forward?

Prepping for a Personal Financial Review

Once your plan has been put into place, think about how you’ll measure its success in the future. Here are some questions to keep in mind as you decide how and when to review your plan.

Question: How Often Should I Review My Financial Plan?

Answer: You should review and update your financial plan once a year, at minimum. During your review, you’ll ensure that the financial aspirations you started with are still relevant. If not, you can reset your goals. 

Of course, you don’t have to wait until your annual review to shift the plan. Life happens. You might get a new job making more (or less) money, experience a relationship change or make a major financial move (like buying a house). Major life events are good reasons for a financial checkup even if it’s been less than a year since your previous review. 

Pro Tip: If you’re planning for a year-end review, remember to give yourself some breathing room during the busy holiday season. 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.

Question: How Do I Conduct My Financial Planning Review?

Answer: A financial planning review includes an assessment of your current financial situation, your financial goals and the decisions you’ve made to achieve them. For instance, your budget may reveal details such as 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.

Here’s a checklist of what to do during your review:

• 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. Consider what kinds of long-term investments would be good for your retirement needs.
• Identify areas with potential for savings. When you’re examining 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 resources like healthcare savings accounts, and if so, are you setting aside enough to cover health and wellness costs? 
• Increase your tax awareness. 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.
• Consider life insurance. 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 reflective of your current wishes.
• Review investment portfolios 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.
• Calculate your net worth. Don’t forget this step! 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 may become 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. 

Get 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, Farm Bureau can help! Connect with us to talk with a financial advisor about your financial plan.