Cashflow planning is an integral part of both financial and retirement planning. It ensures your cash inflows supports your cash outflows. Those without a reliable cashflow plan risk going into debt to cover living expenses and running out of funds in their retirement years. A strong plan analyzes when money is needed and where it should come from.
Budgeting is key to effective cash flow management. As your financial advisors, we help you allocate resources wisely. This supports your daily needs and also contributes to sustainable fincancial habits, promoting stability and reduced financial stress.
Cash flow planning is an important tool in helping to understand your flow of funds. It heightens awareness of every inflow and outflow thus identifying spending patterns. Understanding where your funds are going is the first step in developing a financial plan.
Further, it is important to break down the types of expenses into basic core expenses, which are those costs necessary for daily living, discretionary expenses, and luxury spending.
This focus on cash flows may also lead to potential cost savings, improving the likelihood of having funds left over on a regular basis to pay down debt or contribute to retirement savings. It will also help to ensure that your basic core expenses are covered by more stable and reliable sources of income such as CPP, OAS and other pension income.
At Mirador Corporation, we strive to understand your entire financial picture. This will enable us to guide you through all the aspects of planning your cash flow and recommend strategies to find the optimum balance between cash-in-hand, paying down debt and making wealth-preserving investments. We will also help you to identify your total sources of income so that we have a clear understanding of how much cash you will need to withdraw from your investment portfolio each month to meet your expenses and how much of this withdrawal will be covered by the distribution from Mirador Income and Stability Fund, and how much will be a draw on capital.
When you are relying on your investment income to fund cash flow requirements, we will make recommendations as to which account makes the most sense to fund the cash need, taking into consideration the income being generated in that account (which will minimize drawdown) as well as the overall income tax situation of you and your spouse such that income taxes are minimized on each cash withdrawal.