Cashflow modelling is a data-driven financial planning tool that uses current and historic data about your finances to help you answer the big questions you have about your financial future.
It forms an important part of all our clients’ financial strategy, by helping us:
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?
Prior to creating your cashflow forecast, your adviser will take details about your current financial position. They will ask you for details such as:
Although it may seem intrusive, your financial adviser needs accurate information about your finances to produce a realistic model. As clever as it is, cashflow modelling is not an exact science. 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 depends on the quality of the data you put in.
Cashflow modelling is used by financial advisers to bridge the gap between your current financial situation and your ideal future. Should you decide that you would like to retire by the age of 60, for example, this age can be factored into your cashflow model. It can help you understand what you might need to save between now and then to enjoy 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:
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.
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, your child might get engaged and you might decide 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.
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 set to run out of money during retirement, meaning that they should be saving more into their pension now. Their cashflow model will help them calculate exactly how much more they should be paying in to counteract the shortfall.
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.
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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S4 Financial Ltd is an Independent Financial Advisory firm, authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.gov.uk/register/) under reference 401372. Registered office address: Unit A, Causeway Farm, Cricket Green, Hartley Wintney, Hampshire RG27 8PS. Registered in England, Company No: 05089919. VAT Registration no. GB 844 5062 31.
The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financial-ombudsman.org.uk. The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
The Financial Conduct Authority does not regulate cashflow modelling, tax planning, will writing, or trusts.
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Join our subscriber community for our latest news and considered insights
Join our subscriber community for our latest news and considered insights
Join our subscriber community for our latest news and considered insights