An overview of what cash personal cash flow modelling is, how does it works and the benefits.
Table Of Contents
What is cash flow modelling?
In short it shows a client whether or not they may run out of money in the future, whether they may have ‘too much’ money, when they may be able to retire or if they can afford to treat themselves to a luxurious holiday or other big expenditure.
How does it work?
The questions must focus on the client, taking into consideration the client’s goals, objectives and aspirations.
Examples of effective questions are:
- What is the client’s level of income and expenditure?
- Are they expecting any changes to their incomings and outgoings, for example receiving an inheritance?
- Are they planning on staying in their home or downsizing?
- What age does the client want to retire?
- Are they saving for an expensive event, for instance a child’s wedding?
What are the benefits of cash flow modelling?
A financial forecast offers clients invaluable peace of mind.
Points to note
A beneficial way of keeping the forecast as accurate as possible is regular meetings with clients, ideally at least once a year.