Rattiner's Secrets of Financial Planning

CHAPTER 4Dispensing Advice on Cash Flow Management and Budgeting Concerns

“It all starts and ends with cash flow!” Clients can have grandiose plans for gathering assets and tying their objectives to meet the accumulation of these assets over their lifetimes, but if they are not identified clearly and funded appropriately, that will probably not happen. Our role is to help plan out recommendations and build a strong foundation that can enable clients to fund throughout the planning process. Cash flow is the magic key for future success. I tell clients all the time that you can't pay bills without having sufficient cash flow to help during the process.

Part of managing cash flow is to have a handle on debt management. It is too easy to lose track on minimizing or eliminating debt, so careful attention needs to be present here. Debt can come in short-term or long-term denominations, which could generate a very different game plan when managing. In addition to the obvious, the problem with accumulating too much debt is that it could affect credit scores, which ironically will make it more challenging and more expensive to borrow funds to cover the debt, which is the purpose to begin with.

CASH FLOW PLANNING

Cash flow planning ties into the seven-step financial planning process discussed in Chapter 3. The essence and foundation of financial planning can be found in the proper management of cash flow. This is the beginning and should be done for all clients during every planner–client ...