increase. This could impact your cash flows and financial plan. You will have to increase your insurance cover and include your dependents in your Will. Similarly, when your children are married and not dependent on you, you should change your financial plan accordingly.
Change in goals: You will have different goals and priorities when you are in different age brackets. For example, when you are in your 20s, you would like to save for your marriage and give holidays a priority. As you become older and have kids, you begin to think about their education and marriage.
Retirement is another goal that needs to be planned for from the beginning of your career. But many people ignore this, and start planning for retirement in their 40s only. Thus, your goals change as you progress in life. As a result, your investments and financial strategies also need to be updated to reflect the changing goals.
Change in risk profile: Just as goals change in life, so do your risk appetite and risk tolerance. A younger person may be willing to take more risk and invest in aggressive avenues like equity, while an older person may want to safeguard his principal and invest in debt instruments. As your life changes, your risk profile will change, calling for the need to change your financial plan.
All personal and economic changes in your life need to be incorporated into your financial plan. This does not mean that your financial plan should be reviewed only if you face the above changes in your life. Even if things do not change, you must review your financial plan at least once a year to analyse the position of your investments and see if this is helping you achieve your goals.
Remember that merely creating a financial plan will not help you attain financial stability. Reviewing the plan regularly, making changes as required and leading a disciplined life will help you meet your goals and achieve financial stability.
The writer is CEO of BankBazaar.com