The Fundamentals of Cashflow Modelling

A goal without a plan is just a wish.

– Antoine de Saint-Exupery (French aristocrat, writer, poet and pioneering aviator).

When we’re asked about the single most important aspect of successful financial planning, the answer is always the same: “everyone should have a detailed and realistic cashflow model”.

Cashflow modelling for goals

Cashflow planning is vital if financial goals are to be achieved. It’s important to be specific.

For example, it’s not enough to say “I want to have enough to retire comfortably,” you need to think realistically about how much you will need. The more specific you are, the easier it will be to come up with a plan to achieve your goal.

First Wealth’s cashflow management service sits at the centre of our planning process. A detailed discussion will help to establish the objectives that are really important to you. The outcome of these discussions can have surprising results. Differentiating between what is really important as opposed to ‘nice to have’ is critical.

By plotting the various financial inflows and outflows over your lifetime, we can work with you to establish whether you can make that dream purchase, retire at your desired age, or whether you need to put your money to work harder to achieve your goals.

Cashflow modelling with your assets

Once we have established your position, we can look further into how best to allocate your assets to keep your plan on course. The correlation between goals and asset allocation is high. We see many clients who have more than sufficient capital to last for the rest of their lifetime, yet their assets are invested in the stock market placing them at unnecessary risk.

Conversely, a saver with a longer time frame who needs to achieve above inflation returns to meet their retirement income needs is unlikely to do this by investing in low yielding cash assets. Our cashflow modelling process facilitates a sensible and informed conversation about risk with you.

Inevitably, life will throw some curve balls over time (ill health, divorce, losing a job, for example) so regular reviews of the plan are essential to keeping you on track.

Our lifetime cashflow modelling is aimed at individuals who wish to:

  • Become and remain financially well organised
  • Determine lifetime goals
  • Create a lifetime cashflow plan
  • Control tax liabilities

Our Lifetime Cash Flow Plan will enable you to:

  • Produce a clear and detailed summary of your financial arrangements
  • Define your family’s version of a ‘well-balanced life’ and begin working towards it
  • Work towards achieving and maintaining financial independence
  • Ensure adequate provision is made for the financial consequences of the death or disablement of yourself or your partner
  • Financial plan to minimise your tax liabilities
  • Produce an analysis of your personal expenditure planning assumptions, balancing your cash inflows and your desired cash outflows
  • Estimate future cashflow on realistic assumptions (interest rates, growth rates, inflation for example)
  • Develop an investment strategy for your capital and surplus income in accordance with risk/reward, flexibility and accessibility standards with which you are comfortable
  • Become aware of the tax issues that are likely to arise on the death of yourself and your partner

Cash Flow Modelling is just one of the financial planning tools we use at First Wealth.


To find out further information, contact us and we will be happy to help.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

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