Date: February 8, 2021

A High Net-Worth Financial Planning Tip: 6 Times to Revisit Your Budget

Few things are more personal than your budget. Among other things, a budget is an attempt to impose order upon an unpredictable future. Your budget should reflect your priorities and your financial circumstances, both of which can shift over time. Affluent, high net worth professionals have many opportunities for setting, achieving and revising goals that are sensitive to dynamic changes – whether it’s responding to unanticipated events or fulfilling a long-held dream.

Given the central role your budget plays in your financial life and lifestyle, we’ve identified 6 different times when it makes sense to talk with your financial advisor and review your financial plans, starting with your budget. It takes time and planning to accumulate wealth. By staying on top of your budget, you help ensure that you’ve taken the steps necessary to protect your wealth through life’s twists and turns.


1. Annually

Even if your year has been relatively uneventful, you should still revisit your budget annually to make sure it remains inline with your priorities. In fact, it is often the case that a quiet period affords you more opportunity to reflect upon your immediate objectives and long-term goals.

An annual review also acts as a backstop if you did indeed experience important events but did not or could not do a timely update to your budget. This is especially important when you’ve had to respond to emergencies or had substantial changes in your finances. These kinds of events, for good or bad, often require extra attention, leaving little time for reviewing your financial plans. Putting an annual review on your calendar ensures that your budget will maintain its relevance as a means to achieve your priorities. (For high net worth financial planning, this step can be even more critical, since the more you have, the more you can lose.)


Contact us! The team at Heritage Capital has been helping people retire with confidence for more than 30 years. Find out how we can help you too.


2. When Your Income Changes

In good times, you may find yourself earning more income than you had anticipated. Perhaps you (or your spouse) have been promoted, or your business has expanded. Or perhaps your investments have enjoyed significant gains. Additional income is always welcome, but without a corresponding budget update, it’s possible that your extra money will lead to spending that isn’t aligned with your priorities.

On a darker note, a sudden decrease in your income is a time for important decisions. Revisions to your budget may be needed to preserve your priorities while reducing non-essential spending. You may have to temporarily postpone certain saving and/or investment programs, or even tap into existing sources of additional cash. Beyond budgetary changes, your various financial plans may require some tweaking, depending on the degree of income loss, how long it is likely to last, and any changes to your properties and assets that may be required.


3. Any Time You Take on Large Debt

Debt is a tool that demands careful managing. Whatever the cause for assuming new debt, your budget should account for the cashflows required for debt maintenance. Naturally, much depends on the debt’s structure and terms. Are you contending with significant installment debt that requires periodic payment of principal and/or interest? Your budget should show these payments of course, but it also reflects revisions to other items to balance against new debt cash outflows.

Even when new debt makes good financial sense, there is always the chance of default, even if negligible. Your budget may require provision for contingency plans to protect against unwelcome eventualities, including prepayment penalties, debt restructuring costs, and any returns or additional costs associated with the debt.


4. Once You Reach a Financial Goal (Or Create a New One)

It’s completely sensible that achieving a financial goal will instigate a new one to materialize. Or you might find you need to add a new goal even in the absence of completing an existing one. In either case, your budget may require a substantial overhaul. To take a concrete example, what will you do when you no longer have to finance your graduating child’s educational expenses? Or perhaps you’ve sold your business for a windfall gain.

Not surprisingly, the size of the goal (financially speaking) dictates the amount of revision your budget will need. And it’s not just your budget – your other plans, including estate, investment, retirement and tax plans, may require modification. This is when having a long-term relationship with your financial advisor is especially beneficial, because you’re able to receive solid professional advice as your goals develop.


5. When You Experience a Life-Changing Event

Some life events are well-planned and already feature prominently in your budget. These include expensive events like a child’s wedding, birth of a new child (or grandchild), a pre-planned move or a world cruise. In these cases, you have plenty of opportunity to update your budget for both one-time and ongoing expenses.

Other events can come out of the blue, changing your life in many ways. A divorce, job change, sudden medical situation or loss of a loved one will have repercussions far beyond your finances. After the dust settles, it’s important that you update your financial arrangements, including your estate, insurance and budgetary plans.


6. If Your Budget Isn’t Working

We haven’t mentioned it yet, but one of the most vital budget-related activities is tracking. Without tracking your actual expenditures against your budget, you won’t have the data you need to understand exactly how if the budget is failing. And fail it may. In fact, it’s smart to anticipate that something will go wrong that requires an updated budget.

It’s a telltale sign of budget malfunction when your bills greatly outpace your planned spending. If this is a chronic issue, then the budget requires a new dose of realism. The same is true if you are not meeting your goals for retirement (especially a high net worth retirement), savings or investment contributions. You must decide whether your goals have changed or whether your behavior is no longer aligned with goals that remain the same. These two cases involve different types of changes to your budget, but both require you to make those changes if they seem permanent.

The truth is, if you need to significantly change your budget, you probably need a holistic review of all your financial plans. Your financial advisor is a great resource as your goals and/or circumstances evolve. If you’re currently looking for a financial advisor in the Woodbridge, CT area or feel it’s ready for a change, contact us. The team at Heritage Capital has helped clients across the country for more than 30 years. A no-obligation conversation can have a lasting impact.

Heritage Capital eBook



Paul Schatz, President, Heritage Capital