The Covid and the post covid era brought changes not only in the health of people, but also led to a chain of uncertainties in our lives, jobs and financial condition. Many of us lost our near and dear ones, lost jobs too and many were forced by circumstances to rejoin on a comparatively very less salary.
The phase taught us to save money for our hard times. We do make our plans, but at times, certain circumstances and uncertainties have their own plans for us. We start feeling helpless. To avoid such situations, we should review our financial plans at regular intervals, or say, at least once a year.
In this article, we shall discuss upon some of the reasons why we must consider over reviewing our financial plans at regular interval.
A Change in Our Income
We expect an annual salary hike every year. As per our contract with our employer, even if the salary increases, it is not necessary for us to increase our unnecessary expenses, or spend the arrear in some sort of vacation, or buying a new car even when it is not needed. Instead of spending this hike on our lavish lifestyle, we should channelize this extra one into investments. We can do so by investing into any SIP or RD.
Your Aspirations
When you make a Financial Plan, you set up certain financial goals in this regard. Your financial goals define your aspirations and the strategies you make to achieve those goals. But, even after setting certain goals and objectives, many of us end up spending more and more due to either pressure from our colleagues and friends, or just plain higher aspirations. For example, you may plan to buy a Sedan and start saving for the down payment. But as your income grows, you might want to opt for a SUV over a Sedan. This means that higher income has led to better lifestyle and hence, more savings need to be channelized into investments.
However, it is not wrong about aspiring for more, provided you fund it well in advance by increasing your investments. If you are investing in mutual funds using systematic investment plan, then it is better to increase your SIP investment at regular interval. If you start Rs 1000 SIP in a mutual fund with an expected return of 12%, then over 10 years you will take home Rs 221930. However, if you increase your SIP just by 10% each year, then you will take home Rs 326889. So, it is all about planning the expenses and your investments accordingly.
Lifestyle disease and life-threatening diseases
Today, everybody is running after money and enjoyment. In this rush, our health gets avoided. As a result, we suffer from lifestyle diseases and poor health conditions. They not only lead to a lot of trauma but also financial problems, as we all know that health checkups and treatment are quite costly. So, it is better to review your financial plan and buy adequate insurance cover, that would help you to pay for hospitalisation and critical illness.
Similarly, life-threatening diseases can put the financial plan upside down. If any of your family members suffer from one of such diseases like Cancer, Kidney failure etc, you will have to arrange for a big amount for the treatment. So, you need to have a proper financial planning for this.
Loans and Big Purchases
When we talk of a big purchase and investment, buying a house or plot is a huge investment for the Indians. Since the property prices are generally very high, many prefer to go for loans. The home loans create a large cash flow issue in one’s financial plan for a long period of time. This needs to be taken into account while reviewing one’s financial plan. You should also be reviewing your life insurance covers when you go for a large loan.
Similarly, Education loans co-borrowed by the parents for their kid’s higher education also act as a drain if the kid can’t get a good job after education. The loans, though, need to be repaid. Such situations need to be built into the financial plans by means of periodic reviews.
Events or Ceremonies
In our country, ceremonies like Marriage, birth of a child, marriage, house warming etc are celebrated on a very large scale and money is spent like water. You need to review your financial plans keeping them in mind as well, as they can cost you big.
