What is a financial review?
A financial review is a comprehensive look at your personal finances. It doesn’t include just your income and expenses, but also your assets, retirement savings, debts, home equity and other important financial information. It helps you better understand where you currently stand financially.
As part of the process, you review your current savings goals, retirement timeline and other important targets to figure out whether you’re on track to reach your goals. A financial review also gives you the opportunity to discuss revisions to your plans, such as changing your target retirement date or increasing savings for a child’s college tuition.
What personal financial statements do I need for a financial review?
You can prepare for a financial review by gathering the personal financial statements and other information you will need when you meet with your financial professional. This includes statements for various investments and assets, especially assets that aren’t currently managed by your financial professional. Other documents to bring include copies of life insurance policies, estate planning documents, annuity and business contracts and statements for all your financial accounts.
With this information, your financial professional can help you review your finances to create a strategy to help meet your goals, along with steps to help you stay on track over time. It also helps you see what needs to change to meet your goals, and what can stay the same.
Financial review checklist
Here’s a quick checklist of the information you need to gather prior to meeting with your financial professional.
Assets and debts
- Account balances, including checking, savings, money market and other accounts in your name.
- Balances of investments you currently hold, such as retirement and savings accounts, and how much you are saving in each.
- Balances of all debts tied to your name, like student loans, car loans, mortgages and credit cards.
Expenses and income
- Your average monthly household expenses.
- Your average monthly household income. Be sure to count everything that pays you money.
- Any upcoming large purchases and other expenses you will soon need to address.
Set your goals
- Major short- and long-term financial goals.
Why is a financial review important?
As you manage a monthly budget, contribute to savings plans, and work toward financial milestones, it’s helpful to assess your progress every now and then and adjust as needed. That’s where a financial review becomes important. A financial review is an opportunity to take a complete look at your personal finances, evaluate your success in reaching various goals and see if any changes need to be made. This review process is also important because life events and changing priorities and goals can affect your financial strategy.
You may have new financial goals you want to focus on, making other goals less of a priority. You might also feel that some goals are creating too much of a strain on your budget. Or a pay raise at work may lead you to increase retirement contributions or accelerate timelines for other goals. Find a financial professional today to help you review where you stand and look at whether your previously established priorities still apply.
This is an excellent time to become better informed about your finances and the progress you’re making towards reaching your goals. Whether you’re nearing retirement or just starting your professional career, use a financial review to track your financial progress and create strategies to build even more financial success in the future.