Wealth management involves the integration of both financial planning and investment management. Once a financial plan has been developed to meet your specific needs, an investment management plan must then be designed with a portfolio to support it. However, it’s difficult to develop a sound investment plan if there isn’t a clear picture of your cash flow: what your sources of income are and how you’re spending your money.
Financial planning is based on cash flow. Careful cash flow planning provides you with the means to make smarter decisions with your money, identify future problems, and correct them before they happen. In order to know how much you’re going to need for your retirement, you need to look at how much you’re spending now.
The first step in cash flow planning is to analyze where you’re spending your money. Cash flow analysis involves tracking your spending and then analyzing the results. With this information, you can identify opportunities for improving cash flow and optimize resources such as changing your tax withholdings.
Cash flow analysis gives you an overview of your living expenses as they relate to your current financial situation. However, managing your debt while maintaining your lifestyle over the long term can be challenging. Debt considerations such as outstanding loans or credit card debt with high interest rates attached to them can have a profound effect, financially speaking, in the short term as well as the long run.
Options to reducing your debt could include refinancing your mortgage or consolidating your debts, which could help to free up money that could then be directed into your retirement accounts.
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With future generations of retirees having longer life expectancies, a greater dependence on personal savings will be required in order to achieve a comfortable retirement. Understanding your long-term goals — when and where you’d like to retire, the activities that you’ll want to pursue, what type of home you want to live in — are all important considerations for wealth management.
Cash flow forecasting is a key tool used to help you get a better understanding of your future financial needs and requirements. It provides you with a clear picture of your income and expenses, both now and in the future, as well as your spending habits and debts.
At Blankinship & Foster, wealth management advisors near San Diego, we can help to manage your cash flow now and into the future. Our proven wealth management process is a step-by-step approach that addresses everything that affects your finances — investments, income and expenditures, debts — to design, implement, and manage your personal investment portfolio. We provide ongoing guidance in order to make adjustments to your investments as your circumstances change.
Our goal is to help you move forward as you plan for the future. Call our office to request a consultation with one of our financial advisors.