With Tilney you don’t need a crystal ball to find out what your future could look like. Cashflow modelling involves working with your financial planner to build a complete picture of your finances now and into the future.
See how your finances will pan out
It starts with your financial planner using powerful computer software to build a picture of your current finances. They will analyse details of your income, outgoings, savings and other assets. They can then consider your future goals, such as your required retirement income, and crunch the numbers to create a long-term projection of your finances.
Are you on track?
Your financial planner can tell you if you’re already on track, or give you an idea of what to expect in the future. Like any forecast it isn’t an exact science – our financial planners aren’t psychic! But they can identify trends and make conservative estimates about your future finances to give you the best chance of achieving your goals.
It can make a big difference
This knowledge can make a big difference to your lifestyle today. At Tilney we have even seen people quit their jobs the day after their cashflow modelling meeting, as they have realised that they already have enough money for the retirement lifestyle they want.
Peace of mind
However, for most people cashflow modelling simply gives peace of mind. Rather than presuming that everything will be fine, you can see how your future finances could pan out. This can take a huge weight off your shoulders.
In some cases the results can also expose a problem or identify a shortfall. However, with this knowledge you are able to make positive changes. You may be able to save more money each month or work for another year, with the knowledge that it will bring you a more enjoyable retirement. At the very least you will have more realistic expectations about what the future could look like.
It is easy for someone to imagine that they can predict their financial situation years in advance. However, in practice people tend to be too pessimistic, or overly optimistic about how things will work out. Using cashflow modelling brings their situation to life and lets them see the implications of certain decisions they will make, such as when to retire, or how much money they can give to their family. Seeing this information graphically really makes it easier to understand their situation. A picture is worth a thousand words!
-Neil Wilkie, Financial Planner, Glasgow
It isn’t a one-off exercise
Cashflow modelling isn’t usually a one-off exercise. Many people revisit their results every year to check they’re still on track – or more often if there is a big change in their life. For example, they may have changed jobs or would like to start saving money for a newborn grandchild. If there has been a change in your life that could affect your finances over the long term, it may be a good time to speak to your financial planner.
Running through different scenarios
Life is full of surprises, and what is important to you today may not be important in several years’ time. One of the main benefits of cashflow modelling is the ability to run through different scenarios to see how they could affect your finances.
This can help you to answer questions such as:
- Can you afford a second holiday each year?
- Could you retire early or reduce your pension contributions and still have a comfortable retirement?
- Would your family be financially comfortable if you became ill?
- Will you be able to pay for your child’s wedding?
- How would your savings be affected if the stock market fell or inflation suddenly went up?
Does your future look bright?
If you want to see what your future finances could look like or check that you are on track to reach your goals, the easiest option is to speak to your financial planner about cashflow modelling.
If you don’t have a financial planner, you can book an initial financial planning consultation by speaking to your usual Tilney contact, by calling 020 7189 2400 or emailing firstname.lastname@example.org. We can meet you at your home, workplace or local Tilney office, or we can speak over the phone.
This article was previously published on Tilney prior to the launch of Evelyn Partners.