The end of the financial year is a good time to reflect on what went well this year and what didn’t go as planned. It is also a good time to look ahead and plan for the upcoming financial year and beyond. In this article, we will understand how one can conduct an annual review of their comprehensive financial plan, which includes reflecting on the previous financial year and planning for the upcoming financial year.
Net Worth and Cash Flow Statement
You can start by preparing two financial statements: net worth and cash flow through fiscal year 2025. A net worth statement lists all the assets you own and liabilities you owe others. Assets may include a house, other real estate, a vehicle, gold, shares, mutual funds, bank deposits and any other financial investments and physical goods. Liabilities may include home loans, vehicle loans, personal loans, outstanding credit card balances and any other amounts paid to financial institutions and anyone else.
Your net worth will be the difference between the value of your assets and liabilities. If your net worth is positive, that’s good. You should work towards increasing it further. If your net worth is negative, you need to focus on making it positive.
A monthly cash flow statement lists all cash inflows and cash outflows for a month. Cash flows may include salaries, business income, rent received, interest received, dividends and income from other sources. Cash outflow includes all your regular and ad-hoc expenses. Add up all the cash inflows and then subtract the sum of all the cash outflows.
If your net cash flow is positive, it means you are earning more than you are spending. The surplus can be invested for financial goals. If your cash flow is negative, it means you are spending more than you earn. You should either focus on reducing your expenses, increasing your income, or both.
Evaluate Your Emergency Fund and Insurance
The next step is to evaluate your emergency fund. Depending on your financial situation and other factors, an emergency fund should be equal to 3 to 6 months of expenses. Check if there is enough balance in your emergency fund. If you have withdrawn any amount during the year, you should replenish it.
Evaluate your life insurance coverage to check whether it is adequate. During the financial year, did any major events happen, like taking a home loan, getting married, or starting a family, etc.? If yes, check whether you need to increase your life insurance cover and proceed accordingly.
Health insurance is necessary for all family members. Evaluate whether you have adequate health insurance cover or need to increase it and proceed accordingly.
Budget
It is always a good idea to follow a monthly budget system. It helps you allocate your income to your expenses, savings and investments. There are different methods of budgeting that you can choose from. For example, the 50:30:20 budgeting system helps you allocate 50% of your income to needs (essential expenses), 30% to wants (discretionary expenses), and 20% to savings and investments.
The 50:30:20 budget helps you maintain a balance between non-negotiable expenses, discretionary spending to enjoy life, and investments for your financial goals. Evaluate whether you can grow your savings and investments at a rate of 20%. The higher the allocation for financial goals, the faster you can achieve them.
tax planning
At the beginning of the financial year 2026-27, you will receive a communication from your HR or finance team to make an investment declaration to save tax. Depending on whether you are in the old tax regime or the new tax regime, you will need to plan your tax for FY 2026-27 and make declarations accordingly. Consult a tax expert to help you plan your taxes for the upcoming fiscal year.
loan payment
Do you have outstanding on credit cards, home loans, or any other loans? Create a list for each loan with details like outstanding amount, EMI amount, remaining tenure etc. This will give you a complete picture of your overall credit situation.
Any credit card dues carried forward to the next billing cycle should be given priority for repayment. Banks usually charge interest up to 3.75% per month on credit card balance extended beyond the due date. Make sure you have a plan to make timely EMI payments for all existing loans. For prepayment other than regular EMIs, prefer the loan with the highest interest rate.
If you have a home loan, check whether you would like to make partial prepayment and how much. Accordingly, plan to keep money aside and make the prepayment at the appropriate time.
financial goals
Evaluate your short-term, medium-term and long-term financial goals. Check what progress you’ve made and whether you’re on track to achieve them on schedule. If a new financial goal has come up, add it to your broader financial plan. Make sure that all your mutual fund SIPs are in line with their respective financial goals.
Sit down with your financial planner and review the performance of each mutual fund SIP. If a scheme is consistently underperforming, consider replacing it with another suitable mutual fund scheme.
Review your asset allocation. If the weighting on a particular asset has increased due to its outperformance, consider rebalancing. When you sell a share of an asset class, there will be capital gains tax implications. If a new asset class or financial product has been introduced, check whether it needs to be included in your investment portfolio. If yes, then make a financial plan to invest in it and align it with a specific financial goal.
credit card portfolio review
Credit cards, when used correctly, can provide many benefits, like instant discounts, reward points, complimentary lounge access, complimentary memberships, BOGO offers on movie tickets, etc. Since the beginning of the calendar year 2026, many banks have announced several changes to their credit cards in the form of devaluation. Also, some existing credit cards have been reevaluated and some new credit cards with attractive features and benefits have been launched.
Review your existing credit card portfolio. If one or more credit cards have become devalued and the use case no longer exists, consider closing them. Also, if a new credit card has been introduced and it suits your needs, consider applying for it.
These days, many banks allow you to book flight tickets and hotels by redeeming reward points on their portal. Some banks allow you to transfer rewards points to frequent flyer programs (FFP) and hotel loyalty programs of different airlines. Loyalty points can be used to book award flight tickets or hotel rooms. So, if you use the right credit card to accumulate rewards points, they may sponsor your next family vacation for free.
Update your will
The final step is to ensure that your assets are easily transferred to your intended beneficiaries after you are gone. You can start by checking whether you have enrolled for all your financial products. If you want to amend any existing nomination then do so.
If you have added any new assets during the financial year, include them in your will. If you don’t yet have a will, make one.
Are you on track to achieve your financial goals?
An annual review at the end of the financial year or at the beginning of the next financial year should be part of your financial planning journey. Annual review helps you evaluate the progress you have made in the current financial year. It also helps you plan for the upcoming financial year and beyond. Regular reviews ensure you’re on track to achieve your financial goals. With each annual review, you take a step forward in your financial planning journey until you achieve all your financial goals.
