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| What is cashflow modelling?

Cashflow modelling is a scientific approach to financial planning that uses current and historical data about your finances to help you answer the big questions you have about your financial future.

For example, your cashflow forecast can help provide the answer to questions such as:

Can I afford to retire?

Can I afford care fees should I need to in the future?

Am I sufficiently protected against future financial shocks?

Can I afford to send my child to an independent school?

How does cashflow modelling work?

Prior to creating your bespoke cashflow forecast, your adviser will take details about your current financial position, so as to create a fully rounded picture of where you are right now. They will ask you for details such as:

  • Your monthly income
  • Your outgoings
  • What you are currently saving and investing
  • What you are contributing into your pension
  • Any other assets you may have.

Although it may seem intrusive, your financial adviser needs accurate information about these various aspects of your finances to produce as realistic a model as possible. As clever as it is, cashflow modelling is not an exact science and certain assumptions must always be made about future economic conditions, interest rates and stock market performance. That being said, the accuracy of any cashflow model will be greatly influenced by the quality of the data you put in.


Your adviser will then gather information about your goals, your lifestyle and your hopes for the future and build these scenarios into your model using specialist cashflow modelling software.

How can cashflow modelling help me?

Cashflow modelling is used by financial advisers to create a ‘road map’ to bridge the gap between the money and assets you have today, and what you will need to achieve your financial goals. Should you decide that you would like to retire by the age of 60, for example, this age will be factored into your cashflow model to ascertain what you might need to save between now and your sixtieth birthday to achieve a comfortable retirement.


By amending your forecast to reflect different future scenarios, your financial planner can help you prepare for any eventuality. It means that you can make decisions about your wealth and assets from a place of true knowledge and understanding.


Your cashflow forecast model will help you understand, for example:

  • How your decisions may impact your tax liabilities
  • Any potential shortfall/surplus in cashflow and how to address this
  • The impact of putting more or less money into your pension, investments or savings
  • The effect of retiring a few years earlier or later than planned
  • How many years your pension is predicted to support you for after retirement
  • The impact that inflation could have on the spending power of your cash
  • How much you can afford to spend on holidays and leisure activities
  • Whether you can afford to support your children with a property purchase or wedding.

Creating a bespoke financial plan based on your cashflow model

Using your cashflow model, your financial adviser can create a bespoke financial plan that ensures you are saving enough money to meet your future financial liabilities whilst continuing to enjoy the lifestyle to which you have become accustomed.


This plan will be kept under constant review so that it can be tweaked to account for any changes in your circumstances. For example, if your child were to get engaged and you would like to help them out financially with their wedding, your cashflow model and plan can be adjusted to account for the unexpected expense. It may mean that you have to slightly reduce your leisure spending or retire a year or two later; however, you will be doing so with the peace of mind that you remain on track with your overall objectives.


Your cashflow model and financial plan should be seen as flexible, living documents that can move and change to account for life’s unexpected events.

An example cashflow model

As we have acknowledged, it can be difficult to have open discussions about money with family, especially if you know that your plans may not be welcomed by your heirs and loved ones. At S4 Financial, we are always here to support you when discussing these tough topics.


We pride ourselves on the long-term relationships we develop with our clients, working not only with them but with multiple generations of their family to provide sound, professional financial advice and build the foundations of a prosperous future.


We believe that it’s never too early to start planning for the future, so please do get in touch to discuss your requirements.

This example model shows that the client is currently facing a shortfall in their retirement income, meaning that they should be saving more into their pension. Their cashflow model will help them calculate exactly how much more they should be paying in to counteract the shortfall.

Modelling your financial future

If you have ever wished for more certainty when making key decisions about your finances, then a cashflow model could be the perfect solution for you.


At S4 Financial, we have been specialising in cashflow modelling since our inception in 2004. We place science at the heart of our strategy, to provide you with the confidence you need to make the best choices for your future.

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Should you wish to book a consultation with an adviser to see how we can help you grow, maintain and preserve your wealth for a prosperous future, please do get in touch.



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