Cash Flow Modelling Services | Cashflow Modelling

What is Cash Flow Modelling?

It is not enough to say “I want to have enough money to retire comfortably” – you need to think realistically about how much you will need to do this. And the more specific you are, the easier it will be to create a successful financial plan.

This is Cash Flow Modelling – it sits at the centre of our financial planning process and is a vital step in achieving your financial goals.

In our financial planning process, Cash Flow Modelling comes after we have established a clear idea of your objectives. We find that it helps you visualise the journey to achieving these goals and aspirations.

To ensure this model is as accurate as possible, we use interactive technology to plan and adapt to real-life events before, during, and after they happen. This allows us to use all information available to answer every “what if?” scenario.

We believe that everyone should have a detailed and realistic cash flow model because a goal without a plan is just a wish. And, inevitably, life will throw curveballs along the way, so regular reviews of the plan are essential to keeping you on track.

What are the benefits?

Cash Flow Modelling gives you a tangible, visual, forecast of your financial future from now to the later years. This forecast considers how your finances will be affected in several scenarios and events. For instance, when can you comfortably retire? Do you need to work for longer? Change the way you save and invest?

At First Wealth, we operate based on ‘What Matters Most’. This refers to the things in life which matter most to our clients as individuals, couples, or families. Cash Flow Modelling helps you better plan to achieve and protect What Matters Most to you.

And, in forecasting curveballs, accounting for different events, and creating a visual representation of both, Cash Flow Modelling helps you feel clear, confident, and in control of both your finances and What Matters Most.

Reality is, no matter how hard we try to put them off, life always throws curveballs. Whether it’s health, family, or the world, life never follows a linear path. And that is the same whether you have a net worth of £200K or £5 million. Some of these changes inevitably affect your finances (and, by extension, you).

Unfortunately, we don’t have a crystal ball. But we can plan for life events (like early retirement, having kids, selling your house etc.) using Cash flow Modelling to understand the impact they may have on your finances. We can also project forecasts for curveballs like going into long-term care, supporting the care of family, receiving an inheritance etc.

Man looks at his cash flow modelling to see the timeline of his wealth

What are the potential risks?

Cash flow modelling doesn’t predict the future – some projections could be incorrect. The returns seen from cash flow modelling are linear; considerations for financial risks and rule changes must therefore be made.

To accommodate these risks, your cash flow model is reviewed on a regular basis by your financial planner. Reviews also take into account any changes in both your life and the goals you have set. Your cash flow modelling will also consider your trajectory under different circumstances (for instance, if you retire early, buy a bigger house, or travel more).

It is important that you discuss these risks with a Certified Financial Planner.

How do we plan for Cash Flow Modelling?

When we meet with a new client, we have a detailed discussion which helps to establish the objectives which matter most to them. Differentiating between what is important and what is ‘nice to have’ is critical.

We then plot the various financial inflows and outflows over your lifetime to establish whether you can make that dream purchase, retire at your desired age, put money aside to achieve your goals, etcetera.

Once we have established this, we can look further into how best to allocate your assets to keep your plan on course – there is a direct correlation between asset allocation and goals.

Our lifetime Cash Flow Modelling enables you to: