By Kevin Gibbons
A cash flow plan has long been identified as a critical component for personal wealth management. In his commentary in 2016, Ron Carson of Carson Wealth Management Group discussed the importance of cash flow plans to people both before and during retirement. Most of us recognize and convey the importance of a solid cash flow plan to our clients in terms of ensuring they are spending within their means, preserving their core assets for long term financial stability and contingency planning for unexpected expenses.
But there is another, psychological, benefit for the client with the robust cash flow plan. Today, the economic future of the country and the world appears more uncertain than ever. Whether it is or not is a matter of interpretation of a wide slew of data and metrics. But to the average investor, it certainly appears more uncertain. Many people feel they have no control over that money, and while they trust their advisors, that lack of control can be distressing.
This is where a solid cash flow plan can help. For most people, understanding and managing their day-to-day finances can provide a level of certainty and peace of mind in their otherwise uncontrolled financial lives. Giving them that solid anchor regarding their daily lives can provide some peace of mind to balance out the chaos they perceive from the market and world news reports.
At The Savvy Life, we have worked with over 500 clients (direct consumer and financial advisor referrals) to help them create Spending Plans – income and expense trackers with 12-month look-ahead cash flow plans and practical implementation strategies and tools. A common response we hear from our clients after our standard follow-up meeting with them is that, while the concrete benefits of knowing where their money is going is wonderful, their real appreciation has been their ability to stop worrying about their daily finances and knowing that they have a plan and that part of their life is under control.
While we should always appreciate the practical value a cash flow plan provides to a client, never underestimate the psychological benefit it generates. Given today’s perceived economic and market uncertainty, providing that stability and element of direct control over the client’s immediate future can be almost as, if not more valuable.
Kevin Gibbons is a Cash Flow Planning Expert, the Vice President of The Savvy Life and co-author of the international bestseller Living The Savvy Life. For the past eight years, Kevin and Savvy Life Founder Melissa Tosetti have worked with over 545 individuals and families to create Spending Plans.
They also work with financial advisors and their clients doing cash flow planning as well as giving Savvy Living presentations via webinar and in-person to audiences across the U.S.
To learn more about how Kevin and Melissa work with clients, visit The Savvy Life’s Programs Page.
If you’d like to learn more about how they work with financial advisors and their clients visit: The Savvy Life Advisor’s Page