When Was the Last Time You Reviewed Your Financial Plan?
From March 8, 2011
Review your financial plan regularly to ensure that your current plan will meet your future goals. Photo by Darren Hester
Ever heard the term financial IQ before? It’s basically a measurement of your financial understanding. Your acumen—or lack thereof—can be seen in how organized you are with your finances. Although there are a number of factors involved, a simple review will show you exactly where you stand with your finances. It all starts with reviewing your financial plan, starting with these key categories:
- Taxes
- Insurance
- Retirement and Estate
- Budget & Income
- Asset Apportionment
- Savings
- Investments
- Emergency Funds
Can you confirm that all of these aspects are part of your financial plan? If not, the ship to your financial future may not be sailing on a steady course. It’s time to start patching those leaks! If these categories are all represented in your current budget, well, then you can consider yourself above average. It’s still smart to re-examine these areas and make sure that they’ve kept pace with the monetary changes in your life.
Update Your Financial Plan
Keep your financial plan up to date. We’ve already talked about covering each of the categories listed above, and keeping everything up to date. Now it is time to review your entire financial plan to make sure everything fits together and is on-track to get you where you want to go. Just like a hiker checks their position with a compass, you need to review your financial situation and make sure you know where you are and make adjustments to keep on the path towards your destination.
Learn from the past for better financial planning in the future. You will want to look to past financial plans to examine their effectiveness. What worked? What you should have planned differently? Learn from your mistakes and move on to plan for a better calculated future. Then test and tweak your current financial plan to efficiently accomplish what you are setting out for.
You don’t have to take an “official” IQ test to get an idea about what your financial IQ score is. What really matters is that you organize and prepare each category of your finances to create a cohesive, healthy financial plan. Just remember: keep your finances up to date, learn from past money mistakes, and you should be well on your way to a prosperous and prepared financial future.
