Finance: Events that trigger the review of your financial plan

The key to a financial plan is actually having one. Too many people think that it is something you put off until you have enough money or will only have to think about when planning for retirement. A financial plan, however, is important from the get-go. A financial plan should be with you like a good friend from the day you start working and throughout your life until well into retirement.

Each year, across all savings, investments and accounts, you should revisit your priorities and your strategy for reaching them. Monitor your goals and check if they are still aligned with your current situation. If your conditions have changed, make adjustments as necessary to ensure that you still meet timeframes and risk tolerance in order to bring your portfolio profile in line with relevant market performance.

Your first job: This should be your keynote event when starting your financial plan. You may begin with small amounts initially, however, it will serve as your blueprint to help you manage your money properly. Planning your money is akin to planning your life. It is there for the highest on your priority list, and for the unexpected. You can’t reach your goals nor weather life’s storms without it. The most important resolution you can make when starting a new career is to make it your goal to understand the crucial part investments play in every aspect of your life and every decision you make.

Marriage: Of all events, this is going to make the biggest impact on your financial plan. Shared commitment is shared responsibility – and while as partners you can work together to improve both your financial profiles, there are always going to be expenses requiring refocussing and replanning. Certainly, in many respects you might gain financially by marrying but, generally, the first expense comes with the desire to buy a home, furnish it, renovate it, etc, etc. Suddenly, instead of having money to save each month, you find yourself committed to a bond, maintenance costs and life insurance policies. When you marry, make sure you share your dreams for the future, and that together you prepare a new financial vision for years to come.

Children: The next big change to affect your carefully laid financial plan will be babies. They come with expensive tags. If you have planned for them and notched this into your financial plan, well done, but if not, you will have to do some hasty revisions and see your financial advisor in double-quick time! It is not just the process of producing children that is costly, it is also the lifetime commitment thereafter. A growing family also means you have to revisit your life insurance policies and keep them up to date with the changes in your family.

Illness: People are rarely prepared for this, yet, illness in its various forms can strike any of us at any time. Apart from general medical insurance, you should also build health insurance into your financial plan. There are numerous options to choose from. Don’t rely solely on a medical aid (which, upon investigation, you may find lacking in real returns); always ensure you have the backing of a policy or insurance that will cover you when the basics run out. Furthermore, be sure to review and update every year.

Divorce: This is the one big event that no one plans for. After all, you’re not planning a divorce when you’re getting married. Not only can it be the biggest upheaval in your life, but it can ruin a great deal of your careful financial planning. Lawyers are costly, likewise, alimony and child maintenance. Where there was once one household with shared expenses, there are now two and double debits. While you can’t exactly plan for this, you should keep a good eye on your investments as well your emotional investment in your marriage, and schedule regular, annual review meetings with your financial advisor.

Losing your job: This may be the most difficult event of all…and difficult to plan for. Nonetheless, everyone should keep this possibility in mind seeing as circumstances change constantly; companies close and jobs become redundant in the advance of new technology. Thus, regardless of how you have your monies invested, what you will need is at least six months salary kept tidily in one place at any given time. You need to ensure a ‘hammock’ of security during the time you may be out of work – and preferably it should not form part of your general investment portfolio but a specific savings account easily accessible only if you lose your job. Once your regular contributions to your portfolio are threatened by job loss, you will require assistance to review and stabilise your financial plan under new circumstances – and a savings plan for this event will help to keep your main plan functioning.

Parental death: We often don’t think about this as part of our financial planning. When one elderly parent dies, you may be left with the other who has a limited income. This possibility should be factored into your financial plan several years ahead. No doubt, you will know your parents’ financial situation intimately and be able to gauge if assistance is required as they age or have to seek frail care (which is often expensive). Circumstances may mean that an elderly parent has to move in with you, requiring, firstly, alterations to your home and eventually home nursing care. Whether you plan for this ahead of time or it catches you off guard, it’s going to impinge on your finances.

Retirement: This is the ultimate goal you’re working towards – to retire with financial freedom and to be able to enjoy your well-earned retirement to the full. However, before you hang up your hat, you will need to visit your advisor, because now you have to put in place pensions and investment funds that will, after years of contributions, be called into play to give back on the long years of savings and sacrifice. In retirement, you are now paying yourself and it’s important that you not only plan for this event but ensure that you get the best out of it without decimating your funds within a short time.

Planning with the Specialists

Foster Private Clients, backed by a proud 30-year history, Group believes in working for only the best results in all areas – from investments through to retirement planning and insurance matters. Creating a personal partnership with each client – and mindful of every individual’s plans, dreams and goals – we are there to guide and advise you on each milestone of your financial journey, not only during your working years but well into retirement.

For us, it’s about more than just generating income and retaining capital in investments, it’s about the quality of your life each step of the way and your ultimate peace of mind. That’s why we focus on building sound relationships based on professionalism, experience, and friendship.

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