How to review your financial plan in five practical steps

Life rarely stands still. New opportunities arise, circumstances change, and your priorities can evolve over time.

Creating a comprehensive financial plan is a crucial step for anyone looking to secure their financial future. However, simply drafting a plan and setting it aside may not be enough. Regularly checking in on your financial plan ensures you can refine and adapt your strategy based on changing circumstances.

Here are five helpful ways to check in on your finances and regain control.

1. Identify unhelpful spending habits by “resetting” your budget

Think of your budget as the foundation of your financial plan. Over time, like any structure, cracks can appear, sometimes without you even realising it.

Here’s how to reset your budget and address any “cracks” before they get worse:

• Go back to the basics. Take a detailed look at your income and expenses using bank statements, budgeting apps, or even a simple spreadsheet.
• Identify changes to your expenditure. If your circumstances have changed recently, identify whether your regular expenditure has gone up, decreased, or stayed the same.
• Tackle “lifestyle creep”. Lifestyle creep happens when your standard of living subconsciously increases alongside your income. You might be spending more on clothes, eating out, or indulging in luxury purchases. These can add up, so making conscious adjustments could help free up additional funds.
• Understand your priorities. It’s important to acknowledge if your current spending aligns with what’s truly important to you. This could be an opportunity to realign your finances with your values.

Whilst it’s important to still enjoy the fruits of your labour, being more prudent with how you spend and save your money could have a significant effect on your long-term financial plan.

2. Manage your investments in line with your goals

Although changing your plan at every market shift is unlikely to be helpful, it’s worth checking in on your investment portfolio each year to ensure it remains aligned with your goals.

• Review your risk tolerance. Are you still comfortable with the level of risk you’re taking with your investments? Major life events could change your outlook on this, so it’s worth checking in.
• Consider your time horizon. Are your financial goals closer or further away than they were when you first set up your portfolio? This could affect how you and your Financial Planner allocate your assets.
• Assess your personal goals. If your aspirations have changed, it’s important to discuss this with your Financial Planner, as this could require a shift in your strategy.

Regularly reviewing your portfolio can help ensure that your investments are still aligned with your financial goals, allowing you to shift and adapt as needed. This is something we can help with.

3. Protect what matters most by reviewing your financial safety net

Life is unpredictable, so ensuring you have adequate protection in place could help safeguard your financial future and the wellbeing of your loved ones.

Just as you might check the batteries in your smoke detectors during a spring clean, it’s essential to review your protection policies at least once a year.

If you’ve undergone significant life changes, you may want to re-evaluate your level of cover. Changes might include:

• Getting married
• Expanding your family
• Losing your partner or spouse
• Getting divorced
• Receiving a pay rise or changing jobs
• Purchasing a new property
• Being diagnosed with an ongoing medical condition.

Checking in with your life insurance, critical illness cover, and income protection – if you have them – may give you the peace of mind that you’re still covered should the worst happen.

More than that, as your responsibilities grow, you may need to increase your cover to ensure your family is financially secure in the event of unforeseen circumstances.

Work with your Financial Planner to ensure you’re still covered as you need to be.

4. Balance your financial goals by organising your priorities

It’s unlikely that you are working towards one sole goal in your life. Usually, you will have several important ambitions and responsibilities that require a delicate balance.

For instance, you might be saving for your children’s education and supporting elderly relatives simultaneously, all whilst trying to secure your retirement. Balancing these diverse goals often requires building a resilient but adaptable financial plan.

First, identify all your financial priorities by making a comprehensive list of your short-, medium-, and long-term financial goals. Examples include:

• Starting a business
• Becoming debt-free
• Buying a second property
• Saving for a big holiday
• Boosting your pension
• Supporting your children with milestones like a wedding or first home.

Remember, a long-term goal for someone else may be a short- to medium-term goal for you, and vice versa. Everyone’s situation is unique, which is why working with a Financial Planner can be so helpful.

Together, we can build a financial plan that evolves as your needs change.

5. Check in with your retirement plan

Retirement is one of life’s most important milestones, so it’s crucial to regularly review your plan and ensure you’re on track for a comfortable future.

For instance, if you are now fewer than 10 years away from retirement, it could be wise to talk to a professional about the risk your pension investments are exposed to.

As time goes on, your Financial Planner will work with you to adapt your plan. This might involve increasing your pension contributions, exploring different risk options, and assessing how inflation may erode your funds over time.

The value of a Financial Planner

A Financial Planner is your trusted adviser, providing invaluable support in revitalising and maintaining your financial plan. They can assess your unique circumstances, goals, and risk tolerance to create a tailored financial plan that addresses your specific needs.

Moreover, they will work with you to review your plan, making necessary adjustments as your life evolves and the financial landscape changes.

Get in touch

If you have a financial plan in place with us already, talk to your Planner to discuss a review of your wealth. If you want to explore building a financial plan from scratch or improving an existing plan, talk to us today.

Email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.