What is cashflow planning?

Put simply, cashflow planning is calculating how much money you’re earning against how much you’re spending, with the surplus going towards your investments. The rate of inflation needs to be factored into this calculation, as does your targeted rate of return, as well as the level of risk you are prepared to take.

This is an estimated figure - we won’t know precisely your future income, or what your expenses will look like in a few years time. Inflation and the rate of return on your investments will vary too. However, it does give us an indication of what your cashflow could look like, which in turn allows us to best-prepare for your financial future:

How much do I need to save for retirement?

As you work, your earnings should be accumulated, and put towards your retirement fund. The more you save when you’re working, the more you’ll have for retirement, and the earlier you can become financially independent - i.e. you no longer need to work. We’ll calculate an annual savings target for you, so that you can meet your financial independence target, and as time goes on, these projections can be made with increasing accuracy.

How much money do I need to insure?

A cashflow tool can be used to work out capital shortfalls in the event that income was lost due to illness or death. We can then calculate an insurance schedule to fill in the gaps. We’ll review the gap every three years and adjust, or maintain, the insurance cover as required.

How much can I safely give away?

This is a really critical question for inheritance tax planning. The simplest and easiest form of planning is to give money away and if it exceeds allowances; survive seven years and it will have dropped out of your estate for tax purposes. We also implement trusts, which allow you to retain an element of control on how and when money is passed on. Again, the same question applies; how much money can you give away?

How much money can I spend in retirement?

We will calculate an amount you can spend per month, in order that your pension pot sustains for the length of your retirement. We can also implement saving plans if you want to have regular life experiences in far away places, or some other long-held life goal.

How much risk can I afford?

Part of our role is to assess your attitude to investment risk, or your risk appetite. It may be that you do not need to take much risk at all to achieve your future goals. We assess the lowest growth rate, or real rate of return, required.

How much does this cost?

This forms part of our diagnostics following our ‘discovery meeting’ with you. As such we charge no fee for this service as it helps form recommendations around everything else we do.