The power of cashflow planning

Post by Mearns & Company in News

The future is one thing we cannot know – we have never imagined having to live through a pandemic and here we are trying to find our way through it.

Yet the future is something we constantly think about and try to forecast. Scientists are predicting by how much sea levels could rise due to climate change, economists are forecasting future trends in GDP growth, I am guessing if I will be able to see my family for Christmas this year. We all are doing some calculations to give us more certainty about the most uncertain thing – the future.

Saving and investing are actions you take now for your financial future. Whether you are saving for a house deposit in a few years’ time, your children’s university education or retirement in ten years, it is important to have an understanding of if what you are doing is enough. In other words, you want to know what your financial future may look like.

Cashflow planning is one of the ways you can have answers to your questions. Having used cashflow software for a number of years, we have witnessed its power to transform how our clients feel about and see their financial future.

The power of difficult conversations

Our cashflow model is a colourful chart showing how the value of our clients’ assets may change in the future depending on their income, expenditure, inflation and investment growth assumptions. This sounds simple and fun but it often forces us to have difficult conversations with our clients because the questions are there, on the screen in front of us. These conversations turn out to be life changing.

Whether the conversations are about not being able to fully meet your financial goals or having a more secure financial future than you imagined, I believe that it is always better to know the truth. It can then empower you to take action.

The power of action

The financial future projected by a cashflow model is not set in stone. There are actions that you can take to help you achieve your goals and bring you closer to the future you want.

The action plan, or your financial strategy, can be something as simple as increasing your pension contributions or setting up an income protection plan. When the World Economic Forum is projecting that UK citizens will on average outlive their savings by ten years1, when 41% of British people do not have enough savings to live for a month without income2, every small step you take to improve your own financial situation can make a difference in the long term.

The power of flexibility

One certainty about the future is that it evolves – your circumstances and financial goals will change, taxation and economic conditions will also be different a few years from now. Life and economic events, as well as being personal, can have financial implications on your future plans.

We have seen clients retiring earlier than planned because the pandemic showed the true value of spending time with family. We have talked with clients about postponing their retirement due to a temporary loss of earnings. Other clients returned to work from comfortable retirement following their call to help the overwhelmed health system.

These are just a few examples of different courses that lives can take in one year. The cashflow model has the flexibility to adjust to various changes and it also spans a time period as long as 60 years, depending on your age. This allows you to ask the difficult question of what if?, have it reflected in the model and then follow up with a new action plan.

The power of peace of mind

Understanding how your financial future may look like, having a financial strategy in place and regularly reviewing this, can bring peace of mind that at least this aspect of your life is being taken care of. Even though the future is by no means guaranteed and cashflow planning has its limitations, there is one less thing to worry about.

The practices of being present and mindfulness are very popular these days. Although they have their benefits, it can be difficult to be here and now if you are not sure what your financial future holds for you. It is never too late to get more scientific about this by employing an Excel spreadsheet or a cashflow model.

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Aurelija Buckute, Chartered Financial Planner 


If you have any questions or would like advice please use our contact page here.


The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

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