You should review your financial plan on a regular basis


A financial plan is a living, fluid document that should be refined whenever a significant personal or financial change takes place in your life. While it is advisable to review your financial plan regularly, specific circumstances may necessitate a more detailed review of your plan.

The best time to start planning for a successful financial future is from the day you receive your first pay-cheque. Your income is the foundation of your financial plan, and you will only be able to achieve your financial goals once you allocate a portion of your income towards savings and investments. Every time you change jobs, are promoted or receive a significant salary increase, you should use the opportunity to revisit your financial plan before allowing lifestyle creep to erode the additional income you will be receiving.

If you decide to marry or enter into a permanent relationship, it may be necessary to make appropriate adjustments to the life cover component of your financial plan to consider the needs of your new partner. The death of your spouse or partner will have enormous emotional and financial ramifications, as would be the case should either of you be diagnosed with a severe illness or become permanently disabled and unable to earn an income. If, unfortunately, your relationship does not last, it would be wise for you to proceed carefully before getting divorced because several vital decisions are likely to have significant tax implications.

If you decide to start a family or take on the financial responsibility of an aged parent, it is vital to ensure that you have sufficient life and disability cover to cater for the needs of the additional members of your family should something tragic happen to you.

If you receive an inheritance or a lump sum payment, the first thing you should do is to assess the impact of the windfall on your financial plan before going ahead and spending the money on luxury items. If you wish to invest locally or offshore, you must consider a wide range of factors such as taxation, accessibility, costs, and risk tolerance. Should you want to make donations to family members or support a charity, it is essential to assess the tax consequences before doing so.

When contemplating retirement, there are several critical decisions you need to make in respect of your finances to ensure that you have sufficient cash flow to meet your lifestyle requirements throughout your retirement years.

There are specific times in your life that will necessitate a careful review of your financial plan over and above the regular reviews that you would do as a matter of course. It is always prudent to seek the counsel of an experienced practitioner or experienced Certified Financial Planner® at these crucial times to ensure that you make correct and appropriate decisions for you and your loved ones.

Rands and Sense is a monthly column written by Ross Marriner, a CERTIFIED FINANCIAL PLANNER® with PSG Wealth.
His Financial Planning Office number is 046 622 2891

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