The biggest impact on the success of a financial plan is cash flow and yet when we mention cash flow modelling to perspective clients their eyes can glaze over. Before embarking on any financial strategies, it’s essential to lay a solid foundation. Cash flow modelling is that bedrock. At Fenrir Financial, we will not provide any financial recommendation without understanding the clients cash flow now and into the future.
Cash flow modelling is your financial sat nav. It provides clarity on your income, expenditures, liquid, and illiquid assets and shows you how they interact to facilitate the lifestyle you want to achieve. Picture this: you’re on a road trip, and your GPS tells you about upcoming obstacles, alternative routes, and estimated arrival times. Cash flow modelling does the same for your finances. It empowers you to plan with confidence, make informed decisions, and navigate around potential financial roadblocks.
All real financial planners use cash flow modelling systems with their clients to show them various scenarios which will likely include the following:
- Will I have enough cash flow to live the life I want to live.
- What happens my cash flow if I am unable to work.
- What happens my families cash flow if I die unexpectantly.
When these bases are covered, we then move on the fun stuff which may include some of the following.
- Can I afford to reduce my working hours.
- Can I afford to buy a holiday home.
- Can I afford to retire early and spend time travelling.
- Can one of us take time out to raise our family.
Everyone’s financial journey is unique and as your planner, its our job to break down the complexities, through clear communication, ensuring you have crystal-clear understanding of your financial roadmap which then directs you to what strategies you need to put in place to arrive at your destination.
To put in place a financial strategy without understanding your lifelong cash flows is just taking a stab in the dark and not to be recommended.