How cashflow planning can help build a bright financial future

A process known as cashflow planning helps us forecast our client's future finances in order to determine whether they're on track to achieve their financial goals.

Life is unpredictable, but visualising your future financial position can help prepare you for anything that life throws at you.

The process will reveal your current position relative to your preferred position by creating a detailed picture of your investments, debts, income and expenditure and projecting this forward, year by year, using calculated rates of growth, income, inflation, wage rises and interest rates.

By analysing your current and forecasted financial position, we can help you plan to ensure that you make the most of your money to achieve your financial objectives.

It can help answer key questions such as:

Will I have enough money to retire when I want to?
Am I going to run out of money in later life?
Can I spend money now on a holiday or help my children purchase a home?
How can I take an income in the most tax-efficient way possible?
Will my family be financially secure if I have to go into care or if I die unexpectedly?
Will there be an Inheritance Tax liability on my death?

Gathering data

The initial step is a detailed analysis of your current situation. How much income do you receive each month? What are your outgoings? How much money do you and your partner have in pensions, ISAs and other investments?

The key data is inputted into a specialist computer programme which will crunch the numbers to create a long term projection of your finances. This will show your future requirements alongside any increase or decrease in your assets, helping to identify any potential surplus or shortfall.

Considering different scenarios

Cashflow planning is particularly useful in the analysis of different 'what if' scenarios.

For instance, retiring earlier, a lower than expected return on your investments, downsizing your property or rising inflation. Considering different scenarios can help you plan for life's unexpected events.

How accurate is cashflow planning?

Cashflow planning can help us make sensible assumptions about your future finances. Like any forecast, it's never going to be completely accurate, but it can identify trends and show you if you are on track to reach your goals.

Regular reviews

Cashflow planning is not a one off exercise, it’s something that should be revisited from time to time to ensure it reflects your changing situation.

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