What is it?
Cash flow modelling begins with understanding your current financial situation. This includes income sources (e.g., salary, investments), expenses (e.g., mortgage, utilities), assets (e.g., savings, investments), and liabilities (e.g., loans, credit card debt).
It involves projecting the movement of funds in and out of your financial plans over a specified period, typically several years into the future. By creating a detailed cash flow model, we can provide you with a clear picture of your financial health, identify potential shortfalls, and develop strategies to achieve your financial objectives.
How does it work?
We use historical data and assumptions to project future cash flows. This involves estimating how income and expenses will change over time. Assumptions can include factors like inflation, investment returns, and changes in income.
To make the model more robust, we often run various scenarios. These scenarios might involve best-case, worst-case, and most likely outcomes, helping you understand the range of possibilities and risks.
Key considerations
Taxes play a significant role in cash flow modelling. We can help you optimise your tax strategies to minimise liabilities and maximise savings. This includes considering tax-efficient investment options and retirement planning.
Financial situations change, so we regularly review and adjust the model to reflect changes in income, expenses, goals, and market conditions.
