5 Year Statement of Cash Flows

The first part of the Sterling Edge Financial Planning process is to build a five year statement of cash flows.  This exercise  will help us understand how we have committed and positioned income.  See our known, fixed and planned financial commitments. From insurance premiums to liability and loan payments, panned vacations to car purchases.  

Setting Expectations 

The 5-Year Cash Flow statement will never be perfect.  It will always have inaccuracies, and that's OK.  The core focus of the report is to help us visualize and identify our financial capacity.  Understand what we need to earn to support our current life style. Understand how our income, obligations, commitments impact our finances over the next five years.

Harness the Power of the 5-Year Statement of Cash Flows in eMoney for Strategic Financial Planning

As a Certified Financial Planner at Sterling Edge Financial, we often emphasize to clients the vital role that understanding cash flow plays in achieving financial well-being and security. The 5-Year Statement of Cash Flows in eMoney is a key tool in this process, giving us a way to meaningfully view of your immediate financial future. Here’s how it works and why it’s indispensable in your financial arsenal.

What the 5-Year Statement of Cash Flows Reveals

This forward-looking report is neatly categorized into three crucial segments: Cash Inflows, Cash OutFlows and Portfolio Assets Balances. 

Cash Inflows show us where our income is coming from and when.  Example:  Maybe have a large bonus next year, or a pay increase.  Maybe we have business income or rental income.  All of those inflows will be documented here. 

Cash Outflows will show Living Expenses, Liability payments, Insurance Premiums, Estimated Tax Obligations, Planned Savings, Real Estate Expenses and one time or recurring expenses specific to your plan. Example: Childcare costs for the next 4 years, one time vacation in 2 years, house repair, new car purchase, etc. 


Leveraging the Report for Strategic Financial Planning

From our experience at Sterling Edge Financial, the 5-Year Statement of Cash Flows is a dynamic tool that does more than just track where your money comes and goes. It equips us to make savvy financial decisions.

1. Planning Known Expenses: The report provides a detailed forecast based on your recurring and planned expenses. We can visualize future cash shortages and surplus periods, allowing us to make better financial decision.

2. Strategizing Planned Savings and Investment: By examining your cash flows in the context of your investments, we can set more realistic starting points for savings.  Understand what resources we have available and how to further develop and expect cash flows to meet saving and investment goals.  
3. Managing Liabilities: Understanding your financing activities helps us optimize your debt strategy, making sure that liabilities are managed in a way that complements your financial growth rather than hindering it.

4. Preparing for the Future: With this tool, we can simulate various financial scenarios to see how changes in your life—such as a new job, a big purchase, or an unexpected expense—might affect your financial trajectory. This proactive approach means we’re never caught off-guard.

Conclusion
The 5-Year Statement of Cash Flows in eMoney is not merely a report; it's a strategic asset. It allows us to craft a financial plan that not only meets your current needs but also lays a robust foundation for your future goals. By understanding and anticipating every cash inflow and outflow, we can navigate through your financial journey with confidence and precision, ensuring that every decision moves you closer to your financial aspirations.

Disclaimer

This article is intended for financial planning clients of Sterling Edge Financial. The information provided will support, conversations, meetings and advice delivered to help clients of Sterling Edge Financial understand their cash flows, cash strategy and financial capacity.  This article should not be used as or assumed to be financial advice.  

 Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC.  Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Sterling Edge Financial  are not affiliated.