The financial year-end is a good time to reflect on what worked well this year and what did not 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 an individual can conduct an annual review of their comprehensive financial planning, which includes reflecting on the past 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 as of FY 2025. A net worth statement lists all the assets that you own and the liabilities that you owe others. Assets can include a house, other real estate, a vehicle, gold, shares, mutual funds, bank deposits and any other financial investments and physical belongings. The liabilities can include a home loan, a vehicle loan, personal loans, outstanding credit card balances, and any other amounts you have to pay 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, it is 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 inflows can include income from salary, business income, rent received, interest received, dividends, and other sources. Cash outflows include all your regular and ad hoc expenses. Add all cash inflows and then deduct the total of all cash outflows.
If your net cash flows are positive, it means you are earning more than you are spending. The surplus can be invested towards financial goals. If your cash flows are negative, it means you are spending more than you are earning. You should focus on either 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, the emergency fund must be equivalent to 3 to 6 months of expenses. Check whether your emergency fund has an adequate balance. If you withdrew any amount during the year, you should replenish it.
Evaluate your life insurance coverage to check whether it is adequate. During the financial year, were there any major events, such as 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 for all family members is essential. Evaluate whether you have sufficient health insurance cover or whether there is a need to increase it and proceed accordingly.
Budgeting
It is always a good idea to follow a monthly budgeting system. It helps you allocate your income towards your expenses, savings, and investments. There are various budgeting methods 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 budgeting helps you maintain a balance between non-negotiable spends, discretionary spends towards enjoying life, and investing towards your financial goals. Evaluate whether you can increase your savings and investments beyond the 20% rate. The higher the allocation to financial goals, the faster you can achieve them.
Tax planning
At the start of the financial year FY 2026-27, you will receive communication from your HR or Finance Team to make investment declarations for saving tax. Depending on whether you are in the Old Tax Regime or New Tax Regime, you must do your tax planning for FY 2026-27 and accordingly make declarations. Consult a Tax Expert to help you with your tax planning for the financial year ahead.
Loan payments
Do you have outstanding balances on credit cards, a home loan, or any other loans? Make a list with details such as the outstanding amount for each loan, the EMI amount, remaining tenure, etc. It will give you a complete picture of your overall debt situation.
Any credit card outstanding carried forward to the next billing cycle must be prioritised for repayment. Banks usually charge up to 3.75% interest per month on the credit card balance carried forward beyond the due date. Make sure you have a plan in place to make timely EMI payments for all existing loans. For pre-payments over and above the regular EMI, prioritise loans with the highest interest rate.
If you have a home loan, check whether you would like to make a partial pre-payment and how much. Accordingly, plan to set aside money and make the pre-payment at the appropriate time.
Financial goals
Evaluate your short-term, medium-term, and long-term financial goals. Check the progress you have made and whether you are on track to achieve them as per the schedule. If any new financial goals have emerged, add them to your comprehensive financial planning. Make sure all your mutual fund SIPs are mapped to their respective financial goals.
Sit with your financial planner and review the performance of each mutual fund SIP. If a scheme has consistently underperformed, consider replacing it with another appropriate mutual fund scheme.
Review your asset allocation. If the weightage of a particular asset has increased due to its outperformance, consider rebalancing. When you sell a portion of an asset class, there will be capital gains tax implications. If any new asset class or financial product has been introduced, check whether it needs to be included in your investment portfolio. If yes, create a financial plan to invest in it and map it to a specific financial goal.
Credit card portfolio review
Credit cards, when used correctly, can provide numerous benefits, such as instant discounts, reward points, complimentary lounge access, complimentary memberships, BOGO offer on movie tickets, etc. Since the start of the calendar year 2026, many banks have announced numerous changes to their credit cards in the form of devaluations. At the same time, some existing credit cards have been revalued 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 been devalued and the use case is no longer there, consider closing them. At the same time, 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 portals. Some banks allow you to transfer reward points to frequent flyer programs (FFPs) of various airlines and hotel loyalty programs. The loyalty points can be used to book Award flight tickets or hotel rooms. So, if you use the right credit cards to accumulate reward points, they can sponsor your next family vacation free of cost.
Update your will
The last step is to ensure your assets are smoothly transferred to your intended beneficiaries after you are gone. You can start by checking whether you have made the nomination for all your financial products. If any existing nomination has to be modified, do it.
If you have added any new asset(s) during the financial year, include them in your will. If you still don’t 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 start of the next financial year should be part of your financial planning journey. An annual review helps you evaluate the progress you have made in the current financial year. It also helps you to plan for the upcoming financial year and beyond. Regular reviews ensure you are on track to achieve your financial goals. With every annual review, you move one step ahead in your financial planning journey till you achieve all your financial goals.
