Investing can be a very complicated and confusing process, especially for those who are new to it. There are so many options and strategies out there and it can be difficult to know where to start.

Having a clear understanding of what you are hoping to achieve and your current finances is essential before you start to decide how you are to move forward toward your goal. In this podcast I talk about how you can achieve this.

If you would prefer to read about it, there’s also a transcript below.


This week, we are going to look at taking control of your finances.

Because investing can be a very complicated and confusing process, especially for those who are new to it.

There are so many different options and strategies out there and it can be so difficult to know where to start.

One of the most important things that you can do when starting out is to have a clear understanding about what you’re hoping to achieve with your investments.

For example.

  • Do you want to grow your wealth over the long term?
  • Or are you looking to have more immediate returns?

Having a specific goal will help you choose the right investments and make better decisions overall.

And this can be done by using cashflow modelling. Because cashflow modelling is such a powerful tool, that can help you take control of your finances and work towards your investment objectives.

By creating a model of your income and expenditure you can see exactly where your money is going and make informed decisions about how best to manage your resources.

Benefits of Cashflow Modelling

Let’s consider the benefits of cashflow modelling, which include:

1) Gaining a clear understanding of your financial situation.

2) Identifying areas where you may be over spending.

3) Discovering opportunities to save.

4) Making more informed decisions about investments and other financial commitments.

5) Setting realistic goals

Cashflow modelling gives you a graphic representation of your financial future, and an insight into how life events will have an impact. This illustrates what might happen to your finances in the future and enables you to plan to ensure that you make the most of your money to achieve your financial objectives.

The process shows your current position relative to your preferred position and your goals by assessing your current and forecasted wealth along with income inflows and expansion outflows. To create a picture of your finances now and in the future.

This detailed picture of your assets, includes investments, debts, income, and expenditure. Which are projected forward year by year, using calculated rates of growth, income, inflation, wage rises and interest rates.

A cashflow model calculates the growth rate you will require if you are to meet your investment objectives.

This rate is then cross-reference with your attitude to risk, to ensure your expectations are realistic and compatible with the asset allocation needed to achieve the necessary growth rate.

Looking at your financial journey in this way, enables you to implement a detailed plan that outlines how to deliver your financial future.

A Guide To Cashflow Modelling

Download this free guide to help you understand the importance of Cashflow Modelling as part of the financial planning process.

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To ensure that over time you achieve your desired lifestyle goals, it’s important to review your financial plan on a regular basis and make any necessary amendments as your circumstances change.

Cashflow modelling can determine what recommendations and best course of action are appropriate for your particular situation.

Where this approach becomes very useful is the analysis of different scenarios based on decisions you may make.

This could include lifestyle choices or perhaps investment decisions. And by matching your present and expected future liabilities with your income and capital, recommendations could be made to ensure that you don’t run the money throughout your lifetime.

A snapshot in time is taken of your finances. The calculator rates of growth, income, tax and so on that are used to form the basis of any cashflow modelling exercise will always be assumptions.

That is why regular reviews and reassessments are required to ensure you remain on track.

Nearly all decisions are based on what is contained within the cashflow. This would include how much to save and spend and how funds should be invested to achieve the required return. So there is a lot that needs to be managed.

With every financial corner you turn, it is important to run through the numbers, which will help you make the right financial decisions. It is important to be specific. For example, 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.

The more specific you are the easier it will be to come up with a plan to achieve your goals.

If your needs are not accurately established, then the cashflow will not be seen as personal, and therefore you are unlikely to perceive value in it.

Some years there may not be any changes or just small tweaks that you need to make. However, in other years they may be something significant.

Either way you will need to ensure things are up to date. And this will help you to keep your own peace of mind knowing that things are still on track.

When you use cashflow planning, it is important to know that certain assumptions will have been made when making your plan. For example, projected inflation and growth rates need to be made clear.

And it should be explained that the plan and cashflow model is only as good as the information provided. So it’s vital that this is reviewed on a regular basis.

Cashflow planning is something that we do with most of our clients. And if you need help with this. Then please get in touch.

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