Our firm strongly believes that understanding your cash flow is the foundation to any comprehensive financial plan. Understanding your cash flow is basically knowing how much money comes in and how much goes out each month. Do you have a cash flow plan?
Cash flow is a key factor to all plans and it affects all areas of wealth management. For example, we purchase disability and/or critical illness insurance to protect our future cash flow in case of a disability or major illness. We purchase life insurance to provide cash flow to our loved ones in the case of our death. We invest our money in various financial securities to provide future cash flow at retirement time. We save cash flow for future use to put toward opportunities that arise, and in case of emergencies that would erode our current wealth. Without a proper understanding of your cash flow it is difficult to make informed wealth management decisions and very difficult to achieve your financial goals. Imagine a personalized structured cash flow plan that can help you achieve your financial goals, fund your dreams and live the life that is right for you.
Debt Management is related to Cash Flow Management. In addition to understanding your cash flow, you must also understand what debt is; what sources and amount of debt you have; and the effect of your total debt within your overall financial plan.
Proper debt management ensures efficient use of cash flow for the repayment of debt resulting from goods and services you previously purchased; ensures you have access to credit if needed; and ensures you make wise borrowing decisions or use debt instruments to your financial advantage. In practicing proper cash flow and debt management, you can avoid disastrous financial consequences, and prevent erosion of your personal wealth accumulated to date.
Please note, principal, Marie DeLauretis is certified in Cash Flow and Debt Management, having successfully completed the first course of its kind offered in Canada.
To emphasize the importance of cash flow and debt management further, a TD Canada Trust report on savings (by Environics released April 2011) identified that many Canadians were struggling to save funds as 39% of those surveyed used disposable income to service debt and 30% felt they did not have enough to support daily living expenses.