When you fly the plane’s pilot will control the aircraft on take off and landing but will flick over to autopilot while cruising. He doesn’t then put his feet up and read the paper (I hope he doesn’t anyway), he will continually check the flight plan and the aircraft controls to make sure they are on track and everything is OK.
You probably do this within your business too. Your approach to your personal finances and financial goals should be the same.
By not reviewing where you are you risk flying off course and missing your metaphorical runway. This could mean that you can’t retire when you wish, you are faced with a lower income in retirement than you wish to have, or you have to compromise on other priorities; providing capital to your children for example.
Reasons for you straying off course may include:
– A fall in demand for your services that impacts upon your earnings for a period of time. Or, more positively, a successful period that provides you with more profit to extract from the business and therefore achieve your priorities sooner.
– Annual rises and falls in the value of your investments.
– Changes to tax regimes and legislation that impacts reliefs and allowances available to you.
– Unexpected substantial expenditures.
An illness or injury that keeps you or your partner from working.
You should review your financial positon on an annual basis to ensure that your finances are working as hard as possible for you to increase your wealth, and therefore options, over the long term.
