Talk Money Week 2022

The importance of cashflow planning

9 November 2022

By Nick Lee, Regional Director & Charles Cavendish, Associate Director

We all have money worries, particularly in the current economic climate, but talking about money can often be a taboo issue. A recent survey revealed that a whopping 55% of people in the UK don’t feel comfortable discussing money despite feeling worried about it. However, research also shows that people who talk about money make better financial decisions. Talking about money with friends, family or experts can help you feel more confident in managing your finances and give you greater resilience to handle future income changes or big life events. 

Let’s start by talking about the importance of cashflow planning. We consider cashflow planning to be at the heart of financial planning. It is a tool that helps you determine the sustainability of your assets over the course of your lifetime. More specifically, it can help you assess your current financial situation by analysing your income, assets, expenses and liabilities, and reveal if you are on track to achieve your financial goals, such as raising school fees or early retirement. It can also help you identify scenarios in which you might experience financial loss (such as ill health, job loss or even death).  With the insights gained, you are better able to plan ahead to preserve your financial security.

It is important to have a financial plan in place for yourself and your family to achieve what you want out of life, focusing on your personal goals and aspirations. Cashflow planning adds value and helps answer difficult questions such as whether you are saving enough for retirement, if you can afford to change jobs or send your children to private school. Whether you are young and trying to determine if you are taking the proper financial steps for your future or you are approaching retirement and want to find out if your retirement plan is feasible, cashflow planning can be a very important tool. As with most financial planning, the earlier you can start taking action, the more value you can add and the more of an impact you can have on your future. 

There are many cashflow planning models that allow you to simulate your financial situation and give you an indication of what may happen in the future. Their added benefit is that they can provide you with a visual forecast of your finances, better informing you prior to making any big decisions. It enables you to better understand your finances laid out in front of you and then apply changes to test their impact. Cashflow planning is a continuous process that should be reviewed on a regular basis so that you can keep financial plans on the right track and adapt to your changing circumstances. 

There are simple steps you can take to address uncertainties and improve your financial wellbeing. Our wealth management team of independent advisers make use of their expertise, unifying a broad scope of financial planning methods to provide focused financial planning. We consider all of your circumstances to create an effective long-term strategy that works for you and helps your goals become a reality.

We encourage you to use the week as an opportunity to talk about money, and any aspect of your financial life, whether that’s with friends, family or anyone else.