Understanding your financial future
Cashflow modelling is an important part of the financial planning process. The process shows your financial position by assessing your current and forecasted wealth, along with income and expenditure to create a picture of your finances both now and in the future. It will give you an indication of where you may experience a shortfall in your finances as well as helping to set achievable financial goals.
Where cashfow modelling becomes particularly useful is the analysis of different scenarios based on decisions you may make – this could be lifestyle choices or perhaps investment decisions. By matching your present and expected future liabilities with your income and capital, recommendations can be made to ensure that you don’t run out of money throughout your life.
Any financial forecasts that are created using cashflow modelling are not set in stone and only give an indication as to what may happen in the future, so should be reviewed on a regular basis.