Financial planning is not a one-time exercise. As life evolves, your priorities, responsibilities, income, and expenses shift too. If your financial plan does not adjust accordingly, it can derail your long-term goals such as retirement, children’s education, home purchase, or wealth creation.
Here are five critical life moments when reviewing and updating your financial plan is essential.
1. Marriage
Marriage is a major financial milestone that changes your responsibilities and spending patterns.
Why Update Your Plan:
· Combine incomes and expenses
· Reassess budgets and savings goals
· Start joint investments or update your investment strategy
· review insurance coverage for both partners
Action Steps:
· Create a joint emergency fund
· Align long-term goals (home, children, travel)
· Update beneficiaries in insurance and retirement accounts
2. Birth of a Child
Having a child introduces new financial responsibilities, from daily expenses to education planning.
Why Update Your Plan:
· Increased recurring expenses
· Long-term education and health costs
· Estate planning becomes critical
Action Steps:
· Increase life and health insurance coverage
· Start a child education fund (SIP in mutual funds, PPF, or child plans)
· Update will and nominee details
3. Career Changes or Salary Hikes
Switching jobs, receiving a promotion, or earning bonuses can significantly impact your financial situation.
Why Update Your Plan:
· New income allows for higher savings and investment
· Higher risk appetite may allow more exposure to growth-oriented investments
· Tax planning needs adjustment due to salary changes
Action Steps:
· Reallocate investments based on updated risk tolerance
· Maximize contributions to retirement plans (EPF, NPS, 401k)
· Optimize tax-saving investments to reduce liability
4. Buying a home or Taking a Major Loan
Major financial commitments like a home or car loan can affect cash flow and long-term goals.
Why Update Your Plan:
· Loan EMIs reduce disposable income
· Homeownership may require emergency fund adjustments
· Insurance coverage may need an upgrade
Action Steps:
· Ensure sufficient liquidity for EMIs and emergencies
· review risk coverage for property and life insurance
· Recalculate investment goals considering new liabilities
5. Approaching Retirement
As you near retirement, your risk tolerance, income sources, and expenditure patterns change drastically.
Why Update Your Plan:
· Reduce risk exposure in investments
· Ensure stable post-retirement income
· Plan for healthcare and legacy goals
Action Steps:
· Shift from equity-heavy to debt-heavy or hybrid portfolios
· Plan for annuities or systematic withdrawals
· review pension, NPS, EPF, and insurance coverage
Bonus Tip: Periodic Check-Ups
Even if none of the above events occur, review your financial plan every 12–18 months to account for inflation, market changes, or evolving personal goals.
Conclusion
Life is dynamic, and your financial plan should evolve with it. Missing these critical moments to update your plan can affect your wealth creation, protection, and long-term security. By proactively reviewing your plan at these key stages, you ensure that your financial future remains on track, no matter what changes life brings.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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