Three situations when you should review your financial plan! Explained

When someone applies for a loan for a large purchase such as a home or property, it is necessary to analyse their financial plan. You should check your portfolio before applying for a loan and after the EMI begins.

An emergency is not the only event that requires modification in your financial plan. Image: Pixabay

Financial planning is a must for securing your long-term financial needs. It is generally done so that you may meet your investing objectives and help you acheive your financial goals.

Meanwhile, a financial plan also requires review from time to time, and an emergency is not the only event that requires modification in your financial plan. The other events that may affect your financial plan and call for a review can be having another child, a new job that is paying you more than your current job, or getting an offer to go to a foreign country. All these situations may also require a change in financial planning.

In this article, we will discuss three situations when one should review their financial plan.

1. Thinking to get a big loan
When someone applies for a loan for a large purchase such as a home or property, it is necessary to analyse their financial plan. You should check your portfolio before applying for a loan and after the EMI begins.

Before applying for a loan, you should examine your assets to determine how much you want to put down as a down payment. Meanwhile, once the EMI begins, you should revisit your financial plan to determine how much you can invest for other goals, as your savings may decrease due to the house loan.

2. Change in income
Positive changes in income, such as a rise in pay, an increase in company income, a second income, and so on, allow you to contribute more to your financial objectives and achieve them sooner.

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A boost in pay does not always mean an increase in expenses. As your job progresses, you can save more money to invest, which can be effectively done by reviewing your financial strategy.

On the other hand, many people lose their jobs, make mid-career changes, and face other consequences. Financial strategies must also be evaluated during these tight conditions.

3. Change in health status
Life is uncertain, and everyone knows it. Even the most health-conscious person can be diagnosed with life-threatening illnesses such as cancer, heart disease, chronic lower respiratory disease, and others. Alternatively, they may be involved in an accident that leaves them permanently disabled.

These conditions, or impairments, are costly to treat. Furthermore, they may affect a person's work productivity and force them to reduce their working hours. This might lead to a loss or decrease in earnings.

In these cases, it is critical to review your financial strategy and modify your investment objectives.

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