Cash flow analysis is the first part of the financial planning process. So what then is cash flow modelling?
Cash flow modelling is used by financial planners to help forecast your future finances. It shows you in real time how much money you currently have and how much you want in the future and whether you are on track to achieve your goals.
This is a process that helps you actually see the impact on the decisions that you make. It effectively takes you from position A – which is where you are now – all the way through to position B – which is where you want to be – and visually shows you the benefit of any decisions that you make using prescribed assumptions. Now obviously the further away from today we get the more that these assumptions would be inaccurate as-of course we cant predict the future, for example inflation might be at xx% just now, or last years growth may be at 4% but it won’t be at that forever – but using this as a base it helps us get an idea of what impact inflation will have on your money over time.
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