Navigating the 6 Key Life Moments for Financial Reviews

04 December 2023

Life is a journey marked by distinct chapters, each bringing its own set of experiences and milestones. From the commencement of our careers to the joyous occasions of marriage and parenthood, and ultimately to the tranquil retirement years, these chapters usher in changes in our financial needs, preferences, and goals.

This dynamic evolution of our financial landscape prompts the need for periodic financial reviews. But what exactly is a financial review?

A financial review is a comprehensive assessment of your financial situation. It's like taking a closer look at your financial picture, examining not only your income and expenses but also your assets, retirement savings, debts, home equity, and other essential financial aspects. This thorough evaluation equips you with a holistic view of your current financial status, guiding you toward a more secure and well-prepared future.

What is life stage investment, and why is it important?

As mentioned, our financial needs, priorities, and aspirations undergo a natural evolution with time. For example, in our early 20s, entering the workforce, our financial focus often centres on accumulating savings for weddings and maybe even that first home. Due to this, young investors tend to enjoy the luxury of a longer time horizon, allowing them to explore more daring and aggressive investment strategies.

However, as the years advance and retirement nears, our perspective shifts towards preserving the wealth we've amassed. Naturally, our investment approach shifts, too, leaning toward caution and conservatism as portfolios are rebalanced.

Enter life-stage investing, a strategic approach that involves customising your investment strategy to align with the specific demands of each life stage.

This approach is designed to provide you with a solid financial foundation as you transition from one life stage to another. It empowers you to align your financial goals with your dreams and aspirations. Whether you're starting your career, getting married, welcoming children, or preparing for retirement, life-stage investing guides you on how much to save, where to invest, and the level of risk you can comfortably embrace to achieve your financial objectives.

However, in order to do so successfully, the reviewing of your finances is necessary.

The key life moments to consider

Let's explore the significant life stages where conducting financial reviews becomes crucial for effective financial planning and decision-making.

1. At the start of your working life

Embarking on your career journey marks an essential juncture for setting up your financial roadmap. This early phase isn't about having significant savings but rather establishing a solid financial plan that will translate to more returns. How, you ask?

At the start of your working life, you enjoy a significant advantage — time. With a lengthy investment horizon stretching ahead, you have the potential to grow your capital significantly over the years. As such, this is the ideal moment to lay a robust financial foundation and plan for the future.

While it's true that many of us might not have substantial savings initially, your long investment horizon alone allows you to tolerate short-term market fluctuations more effectively. It's essential, however, to be aware of your risk tolerance and make investment choices that align with your comfort level.

2. After a work performance review

A financial review after a work performance review might seem peculiar, especially when your financial portfolio is probably still in its infancy. However, this juncture marks a crucial point in your financial journey. Why?

In the early stages of your career, your primary focus is often on landing that first job and earning a steady income. But now that you've checked that box and you've reached your first career milestone of securing your first bonus, it's an opportune time for your inaugural financial review. With this newfound boost to your monthly income, a financial review will bring clarity to your financial path. Perhaps there are new savings goals you perhaps want to reach now that your monthly cheque has gotten larger?

3. Before getting married

Ever wondered how much to save for a wedding?

A financial review before tying the knot holds significant importance as it signifies a pivotal moment in your life. After all, with marriage comes shared responsibilities for household finances, whether you plan to combine your financial accounts or maintain separate ones. Therefore, it's crucial to assess your financial standing before making this commitment.

Consider essential questions like whether your savings are sufficient for that BTO flat downpayment and if additional savings are needed to manage the finances of the wedding and honeymoon efficiently.

4. Before having kids

Another significant life stage that demands careful financial consideration is when you are about to start a family. This is mainly because, with the arrival of children, your financial responsibilities expand, making it all the more essential to reevaluate your financial strategy.

Questions that need consideration include: Do you have a stable financial foundation to support a growing family? Have you factored in the costs of childbirth, childcare, and education? How will your existing financial goals and plans need adjustment to accommodate your children's needs?

In the midst of preparing for your child's arrival, a financial review serves as a valuable starting point in your financial planning for a family. It ensures that your finances are well-prepared to meet the needs and aspirations of your growing family.

5. When planning for retirement

This juncture, right before we bid farewell to our working life, serves as another critical checkpoint for reviewing our finances.

Ideally, financial reviews should have been a part of our journey at earlier stages in life, ensuring we remained on track to meet our retirement goals. However, conducting a financial review right before retirement can help you better reassess your financial landscape.

Firstly, it allows you to assess whether your retirement savings and investments align with your retirement goals. Are you on track to achieve your desired lifestyle during retirement? Is there a need to delay retirement or maybe even explore passive income retirement strategies? After all, building a passive income strategy through dividends or rental income can significantly contribute to financial security and help you reach the ideal savings amount for retirement.

6. When you inherit money

Receiving an inheritance can be a transformative event in one's financial life. It's a windfall that, when managed wisely, can significantly impact your financial future. This makes conducting a financial review upon inheriting money incredibly important.

Such a review enables you to make informed decisions about how to best utilise the inherited assets. You can consider paying off debts, investing for future growth, or addressing specific financial goals that were previously out of reach.

Chart your financial course with StashAway

When it comes to charting your financial journey, StashAway offers a helping hand with our powerful tool, Moneymap. This invaluable resource assists users in answering pivotal financial questions, ensuring your path is aligned with your unique goals.

For precision in plotting your financial course, StashAway also offers the invaluable assistance of a dedicated Wealth Advisor. Our wealth advisory services are designed to provide you with tailored guidance, ensuring your financial journey aligns seamlessly with your unique goals and aspirations.

Remember, the foundation of a sound financial plan lies in well-defined, quantifiable financial objectives. With StashAway's Wealth Advisor and tools by your side, you gain access to the expertise needed to craft a strategic roadmap towards financial prosperity.

Explore deeper into our investment offerings and take a step closer to realising your financial goals now.

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