By The AllGen Team
The new year often brings renewed goals. That means it could be time to reassess whether your current financial planning strategy remains an accurate road map for pursuing your ideal financial future.
In this article, we discuss the significance of reviewing your financial plan and making potential changes. We go over important topics to think about, including assessing your current financial situation, reevaluating your financial objectives, and re-examining your approach to investing.
Review Your Current Financial Situation
Review your income and expenses first. Track all your revenue sources, such as investments, salaries, and other income streams. Sort your spending into discretionary spending (entertainment and dining out) and essential expenses (housing, utilities, and groceries). This thorough analysis highlights where you might be overspending and pinpoints areas to cut back.
Now determine your net worth by subtracting your total liabilities (debt) from your total assets (property, investments, and savings). This gives you a quick overview of your financial situation and identifies areas that need work.
It’s equally important to analyze the performance of your financial portfolio. Examine your investment results from the previous year and compare them to your overall investment objectives and anticipated returns. Don’t forget to consider variables like your risk tolerance and market volatility.
Revisit Your Financial Goals
Next, do an honest evaluation of your financial goals. Are you on track to reach the retirement savings goals you previously set for yourself? Is your emergency fund full or nearly full? Do you have enough money set aside for your kids’ education?
Truthfully assessing your current path gives you important information about where you’re doing well and where you might need to make changes.
Equally important, your financial goals should always accurately reflect major changes in your life. Significant life events like marriage, divorce, childbirth, career change, and health circumstances can substantially impact your financial needs and priorities. The key is to reevaluate your financial goals to confirm they align with your new circumstances.
For example, having a new child could mean you need to save more for childcare and education. Changing careers might require you to modify your retirement savings schedule.
Based on your new circumstances, set current, feasible, and quantifiable financial objectives for the year.
Reexamine Your Investment Risk Tolerance
As your financial situation and personal circumstances evolve, it’s crucial to reevaluate your investing risk tolerance. Factors like your age, time horizon, and financial objectives affect your risk tolerance considerably. You may become less tolerant of market swings as you get closer to retirement.
Younger investors with longer time horizons, on the other hand, can typically afford to assume greater risk. Your risk tolerance may also be impacted by life events such as marriage, having children, or changing careers. For example, a major life event can make you feel more in need of financial stability, which would prompt you to adjust your assets in your portfolio to less risky investments.
Once you’ve reconsidered your risk tolerance, it’s critical to align your investment portfolio accordingly. This can entail redistributing your investments across various asset classes. For example, if your risk tolerance has decreased, you might consider transferring some of your equity holdings into more conservative investments like bonds or money market funds.
Conversely, you can think about expanding your asset allocation to stocks or other assets if your risk tolerance has increased. By keeping your investments in line with your risk tolerance and investing goals, regular portfolio rebalancing helps you stay on course to meet your long-term financial objectives.
Partner With a Professional
The new year offers a perfect opportunity to take charge of your financial future. By carefully assessing your financial planning strategies, you can make wise decisions, handle market turbulence, and confidently pursue your financial goals.
Our team at AllGen Financial Advisors has the knowledge and experience to help you evaluate your financial situation and help you build a solid financial future.
By taking the time to understand what you own, what you owe, how much money you have coming in and going out, we arm you with the knowledge to make better financial decisions for a lifetime. To schedule a complimentary meeting, call (407) 210-3888 or email advisors@allgenfinancial.com.
About AllGen
Based in Orlando, Florida, AllGen Financial Advisors, Inc. is an independent, fee-based Registered Investment Advisor (RIA) firm dedicated to helping individuals and businesses maximize their financial resources. The AllGen team comprises trusted advisors, each with specialized skills, providing comprehensive guidance and tools to clients at any stage of life or socio-economic position to experience and maintain financial freedom. AllGen offers highly tailored financial planning and investment management, helping clients understand their current financial situation and define their future goals. The team develops and executes customized plans to pursue these goals, managing and tracking investments and financial progress along the way. Known for being relatable and approachable, AllGen’s advisors leverage their vast experiences, education, and interests to make complex financial concepts understandable and personal. At AllGen, clients are treated as individuals, not just numbers.
Important Disclosures: The information provided here is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this material does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences. Past performance is no guarantee of future results. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative (or “informational”) purposes only and not intended to be reflective of results you can expect to achieve. AllGen Financial Advisors, Inc. (AllGen) is an investment advisor registered with the SEC. AllGen does not provide personal financial advice via this material. The purpose of this material is limited to the dissemination of general information regarding the services offered by AllGen. The Disclosure Brochure, Form ADV Part II, which details business practices, services offered, and related fees of AllGen, is available upon request.
