When Should You Revisit Your Financial Plan?

by Angelica Leicht | Updated July 25, 2021 - First published on March 1, 2021

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When is the last time you revisited your financial plan? It may be time to re-evaluate those goals, budgets, and investments.

Trying to balance your budget, investments, debt, and other money-related matters? A financial plan can help. This plan is a document that outlines your current money situation, long-term monetary goals, and your strategies to achieve those goals. Creating a financial plan is an easy way to stay on track with your finances.

But while it's relatively simple to create a financial plan, it can be a lot harder to stick with one. Everything from large purchases to job changes and new babies can have a major impact on your finances. And that can make it tough to follow a financial plan you created when life and expenditures were different.

Your financial plan is a crucial component of a solid financial foundation, though, so it's important to always make sure it matches your goals and the money in your bank account. But how do you know when you need to take a closer look? Here's when you should revisit the goals, budgets, and investments in your financial plan.

Each year

Life changes from year to year -- at times, in significant ways. If you're still using the financial plan you created two or three years ago, it may not align with your current goals or needs. Financial pictures change rapidly, so it's important to take an in-depth look each year. You may find that your plan needs just a quick revision or it may need a complete overhaul. You won't know until you sit down and do the math though, quite literally.

Choose a set date each year when you'll do a deep dive into your financial plan -- and then stick with it. Your financial plan should be a mix of your budgets, your investments, your short- and long-term financial goals, and other money-related metrics, like paying off high-interest debt. That way there will be a good chance you've met a few of the markers you set for yourself over the last 365 days.

Start your evaluation by looking at your short-term goals and decide where you are in meeting them. If you find that you've knocked a few out, it's time to revamp and add more. If you're behind on meeting your goals, you may want to revise them to meet your current financial circumstances.

You should also look closely at your budget and your investments. If your investments are meeting the benchmarks you set, great. If not, it might be time to rethink your investment plan. If your budget is too low or too high, revise it. Work with your plan year by year, not crisis by crisis.

After a promotion or job loss

Any change in your job situation should be a good reminder to update your financial plan to fit your current situation. You may have changed jobs, gotten a raise, or been furloughed due to economic issues out of your control since you last evaluated your financial plan.

It's not just about revising your budget to fit your new salary, either. Your new employer may offer a higher 401(k) match or other financial benefits that you want to take advantage of, and you'll need to work those into your current plan. If you're furloughed or laid off, you may need to dip into your emergency fund and revise your plan to replenish it. Or, perhaps your health insurance expenses or other benefits costs could change, meaning that you need to tweak a few areas to make the numbers work.

There are tons of ways that a job change can impact your financial plan, so make sure you take some time to look closely at your investments, budgets, goals, and other plan components when your employment circumstances change. Otherwise, you could end up with a big mess on your hands when you finally do get around to reevaluating your finances.

Before you combine finances with a partner

Whether you're getting married or opening a joint bank account with a partner, the reality is that combining your finances with someone else's can have a huge impact on your financial plan. You're not just potentially adding another salary to your income. You're also adding your partner's debts and other financial obligations to the mix, which can make it tough to stick to your original plan.

When you combine finances with another adult, you'll likely need to do some shifting with the money buckets to accommodate changes to your income and expenses. Be proactive about how you handle it by evaluating your financial plan together. Decide what you want to prioritize, whether it's paying down high-interest debt, buying stocks, or investing in retirement, and then revamp your plan to reflect those new priorities.

Money problems are one of the main causes of relationship issues, so whatever you do, don't wait for an issue to arise to revise your plan. Catch any potential issues before your finances are combined to help ease the transition while keeping your plan on track. Your wallet, and your partner, will thank you.

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