Cash flow planning

What is cash flow planning and how can it help you?

Many are unaware of the benefits of cash flow planning and how it can help them to outline their finances into the future.


Cash flow planning is a forecast that enables you to see your financial position year by year. It takes into account several factors, such as as your expenditure, the rate of inflation, investment returns and tax rates. 

The outcome of the forecast is key to understanding what you can achieve with your wealth and forms the basis of your financial plan. It allows your financial planner to predict your future cash needs, help you set achievable financial objectives and, if required, warn you in advance if you are likely to run out of money. 

The core components of a financial plan

We consider the key attributes of a financial plan to include:

  • Objective setting;
  • Asset management; and
  • Tax planning.


It is crucial to undertake periodic reviews of your financial plan, so that any changes can be taken into account and your cash flow forecast can be re-modelled to ensure you are still on track to achieve your financial objectives. Common financial objectives include:

  • Early retirement;
  • Comfortable retirement income;
  • Funding later life care;
  • Assisting younger generations with education costs; and/or house deposits; and
  • Legacy gifting.

How can cash flow planning help you?

There are several benefits of cash flow planning, as listed below.

Peace of mind

You will know that your finances are in order and that you are on track to achieve your financial objectives within your timescales.

Contingency planning

Within your forecast, your financial planner will factor in realistic assumptions. This will include potential unforeseen events and acts as a contingency for planning purposes.

Spending check

You will be able to distinguish between your ‘essential spending’ and ‘non-essential spending’ and adjust accordingly. Of course, this is relative and you should decide what spending falls into each category.

Identifying any shortfalls

If your forecasted financial position will not allow you to achieve your objectives, this will be identified. Your financial planner will then help you to make suitable adjustments.

Planning an affordable savings strategy

The forecast will help you to identify what disposable income you have after your spending is considered. From this, you can save what you consider to be affordable to you and over a timescale you feel comfortable with.

Clarification on future objectives

The analysis will enable you to see whether your financial objectives are realistic, based on your financial circumstances at the time and those forecasted in the future. If your objectives need amending, your financial planner will assist you.

Asset allocation

To achieve your objectives in the most tax efficient manner, you may need to reallocate or diversify your assets. This will be identified within your cash flow forecast.

Cash flow planning outcomes

Typically, there are two outcomes of cash flow planning.

You have a surplus of assets

In this instance, you could consider:

  • Early retirement
  • An enhanced lifestyle
  • Gifting
  • Minimising any potential Inheritance Tax (IHT) liability on your estate
  • Reducing the risk associated with your investment portfolio

You have a shortfall of assets

Here, you might need to reconsider:

  • If your scheduled retirement age is still achievable
  • Whether your current rate of saving will help you achieve your financial objectives
  • If your current investment portfolio and risk tolerance will lead to you achieving your financial objectives
  • Reducing your expenditure
  • Your financial objectives entirely


It is important to remember that the benefits of financial planning are relative and, therefore, your financial objectives and overall experience will be unique to you.

A good financial planner will never tell you how to spend your money, but instead show you what you can achieve with your wealth and make suitable recommendations when required. Sometimes adjustments need to be made to achieve financial security, but you should always have the final decision.

Additional information

To find out more about cash flow planning and how it could benefit you, read our guide.

How can we help you?

Financial planning begins by defining your objectives, cash flow planning can help you determine whether these are obtainable in your current circumstances. Cash flow planning is a fundamental component of financial planning.

If you would like to discuss cash flow planning and how it can inform your financial planning journey, or if you wish to arrange an initial no cost, no obligation, consultation, then please fill out the contact form below. Alternatively, you can call 01603 706 820 or email

Important information

The article of this fact sheet do not constitute financial advice. The impact of taxation (and any tax relief) depends on individual circumstances. This has been prepared based on our current understanding of UK Law, Taxation and HMRC practice, all of which could be subject to change in future. The value of investments can fall as well as rise and it may not always be possible to receive back the sum initially invested. Past performance is not necessarily a guide to future investment returns.

While considerable care has been taken to ensure this information is accurate and up-to-date, no warranty is given as to its accuracy. This article constitutes a financial promotion.

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