Sat Nav for Your Finances: A Human Approach to Cash Flow Forecasting
I love my Sat Nav. (I also love helping people plan their retirement with cash flow forecasting – but more on that in a moment!).
*There – it’s out there, and I’m not ashamed to share it!
I even use it to get to work in Chester, and I use it to get home, despite travelling the same route every day for years.
(I say “it”, but my Sat Nav is called Blodwen – always has been, always will be.)
So why use it on such a well-worn path?
Because of those frustrating unknown knowns – like roadworks, accidents, or unexpected delays – the very things that can derail a carefully planned journey (or a retirement plan). Or that particularly nasty pothole the council still haven’t filled with their usual mix of belly-button fluff and Marmite.
Blodwen tells me how long the delay might be and suggests an alternative. Then it’s a quick game of heads or tails in my head – do I follow the advice, or carry on regardless?
Me? If the delay’s minor, I tend to stick with the usual route.
If it’s a significant hold-up and I’ve got somewhere I really need to be, I’ll take the detour.
Why am I telling you this?
Because for some time now, I’ve been wanting to link the guidance a Sat Nav gives with what I offer through cash flow forecasting – for current and future clients alike.
Starting the Engine
Wherever your journey begins, you need to input a destination.
It could be the zoo, a holiday cottage in the wilderness, or – in financial terms – retirement and independence at 60, or whenever you fancy.
To get anywhere, you need to know where you’re going.
You’ll also want to plan fuel stops – to avoid running on fumes by the time you arrive.
The same principle applies when it comes to funding your future lifestyle through smart saving and financial planning.
The Open Road
Windows down, Meat Loaf blasting, everyone driving sensibly.
Savings, investments, pensions – your financial engine is ticking along nicely.
Until... the unknown knows hit again.
The road is blocked. A diversion appears. You’re in unfamiliar territory (at least to you).
The global investment markets can throw up financial roadblocks of their own – market dips, economic uncertainty, inflation – all things we factor in with proper cash flow forecasting. Sometimes, it just needs a tweak. Other times, a bumpy ride is unavoidable. It all depends on how far you are from your destination.
If you have plenty of time ahead, why not take the scenic route and enjoy the view?
That change of scenery might involve a visit to the car dealership, a peaceful fishing lake, or a beach bar serving something fruity with a tiny umbrella (and maybe a splash of something stronger).
But the destination remains in mind.
If you’re nearing the end of your journey and don’t fancy any last-minute excitement, you might tell Blodwen to avoid B-roads, bridges, or ferries.
Same goes for your finances – the closer you get to retirement and drawing on your hard-earned, or entering the decumulation (spending) stage of your financial journey, the lower the appetite you might have for unnecessary risk.
“You Have Arrived at Your Destination”
Phew! You’ve made it. Time to unpack the car and enjoy.
That could be coming home to the family, kicking off your shoes on a beach, or settling into the 52-weeks-a-year holiday some call retirement.
But whatever it is – it still involves money (apart from that peck on the cheek after a day at work, of course!)
Holidays can be pricey, but so can retirement.
The difference? Holidays usually have a fixed cost for a week or two, but retirement is a long-term financial commitment – one that needs careful planning to avoid running out of money later in life.
Cash Flow Forecasting
Holiday money’s easy. Whatever you’ve got left after flights and fuel tends to disappear in ice creams, souvenirs, and drinks with a little umbrella in them pretty quickly.
Spending in retirement tends to follow a pattern – typically in three phases that cash flow forecasting helps to visualise and prepare for:
- The first few years (active, maybe travel-heavy)
- The next few years (a little slower)
- And then the long tail (slower still, but ongoing)
That means your savings don’t need to be accessed all at once – some can stay invested longer and benefit from the kind of returns that only time can bring.
If your ideal retirement includes big-ticket items early on – like travel, a shiny new car, or time to enjoy yourself while you’re active – but later shifts to gardening, old hobbies, or just putting your feet up with a cup of tea and Radio 4 on – we can build a retirement income plan to support that vision.
You’ll also want to factor in income from previous pensions or the State Pension – because, why wouldn’t you?
Mapping the Future
Cash flow forecasting is about taking a clear-eyed look at your future finances – by reviewing:
- What you want to do
- What you currently have (even if that’s zero)
- What you could save or build up
- And whether your future vision matches up with financial reality
If you’re happy to live on roughly £1,000 a month (based on the full new State Pension) from age 66, 67, or even 68 (for all you whipper-snappers out there), then thanks for reading this far.
But if you’d prefer a roadmap to financial security – one that helps you prepare for diversions, roadblocks, and the odd pothole – then let me be your financial Sat Nav.
Let’s work together to build a tailored financial plan that evolves with you – so your retirement stays on track, no matter what the road throws at you.
(Just don’t call me Blodwen – Gareth is fine.)