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How cash flow planning helps you make better decisions with your wealth

Like many people, you no doubt dream of having financial peace of mind, so you can live your life safe in the knowledge that you have enough money.

With so much going on in the world though, this can sometimes become quite tricky; even if you have everything planned out to a T, an unexpected expense could come along and shake your confidence. So, how do you effectively plan out your finances?

This is where a cash flow plan comes in, making it far simpler to plan your spending efficiently.

So, continue reading to find out what a cash flow plan is, and how completing one could help you live life to the full.

Cash flow planning can give you a visual image of your financial situation

Simply put, cash flow models are a tool your financial planner can use to provide you with helpful information so you can plan out your finances.

Using dedicated software, you input your income and assets over a set period of time. You can then calculate and forecast your future financial situation.

With this information, your financial planner can then offer useful suggestions that can help you build a solid idea of your own finances.

A cash flow plan doesn’t just inform you of any potential sources of income or expenses, either; it also takes your financial objectives and needs into account.

Factors such as retirement plans, travel goals, or family needs can be considered. You can then use this information to develop a strategy with your financial planner to figure out how best to reach these goals, and efficiently work towards them without damaging your short- or long-term financial prospects.

This brings clarity, as well as a firm guide, as to how you can reach your goals, and how much money you’ll have leftover afterwards so you can live the life of your dreams.

A cash flow plan is especially handy during times of high inflation and market uncertainty, as it will also take factors such as inflation, mortgage rates, and investment returns into account. That way, you’ll have a projection of your financial situation, even for the worst-case scenario.

So, continue reading to find out some amazing benefits to cash flow planning, and how having one of these models could give you the financial peace of mind you deserve.

3 fantastic benefits of using a cash flow plan

1. They are great for helping you meet your financial objectives

As mentioned, a cash flow plan will include your financial goals, and the steps you would likely need to take to reach them.

For example, using a cash flow plan, you may be able to figure out:

  • When you could realistically afford to retire
  • If you could afford to take your dream holiday abroad
  • When you will be able to purchase the home of your dreams.

Your cash flow plan will project your potential income and expenditure over a certain period of time. This can then help you decide how much you will need to save, and the amount you can afford to spend, in order to reach your objectives.

Additionally, they will project your potential income and expenditure over your lifetime. This will help you decide how much you will need to save to hit your targets.

This is why a cash flow plan can be the key to reaching your financial goals. You can accurately calculate how much you will need to reach these objectives, giving you the confidence that you’ll have enough to go on your dream holiday or live a comfortable retirement.

2. They incorporate many unexpected “what if” scenarios

Life can throw unexpected events your way at a moment’s notice. Significant economic events such as the chancellor’s recent “mini-Budget” can occur while you’re working toward your financial goals, throwing your plans into the air.

In this situation, it can be difficult to get back on track if you don’t have a foolproof plan in place.

With a cash flow plan, many of these unforeseen events can be considered. This allows you to prepare for these different outcomes so that you’re financially secure no matter what happens.

While it’s possible to create forecasts for the future, it’s near impossible to predict everything without a crystal ball. That’s why a solid plan can be so useful, creating contingency plans for when you need to navigate tricky waters.

3. A cash flow plan can help you plan your retirement

A cash flow plan can be a terrific tool for planning for retirement, too. Indeed, your plan will give you an idea of the life you can expect to live when you retire, based on the figures you input at the start. In turn, this also makes it possible to adapt your strategy, perhaps saving more if you think you may be facing a retirement income shortfall.

For example, you could use a cash flow plan to calculate whether your existing pension pot will generate enough income to see you through retirement. If the model shows you that you need to save more, you can then devise a financial strategy that will help you build towards what you need.

This is why, if you’re planning for retirement, working with a financial planner could lift a weight from your shoulders.

We have access to intuitive cash flow modelling software that can help develop an in-depth plan of your financial situation. With this, we can help you build a strong plan with the information it presents so you know exactly how much, and how often, you should be saving for retirement.

After all, spending your well-deserved retirement on a beach in the south of France doesn’t come cheap, so let us help you develop a strong plan so you can live the retirement of your dreams.

We can create a cash flow plan for you

Cash flow planning can be immensely useful for achieving financial peace of mind, especially when you work with an expert who can design a personalised plan for you and your future.

If you would like to discover how we use cash flow planning to build a strategy for you, please get in touch with us.

Email us at advise-me@fosterdenovo.com or call us on 0330 332 7866.

Please note

Cash flow modelling is not regulated by the Financial Conduct Authority (FCA).

Capital is at risk.

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