Every week, we look at the ABCs of cash flow management.

I is for Interest

Currently, there’s a lot of chatter about what may happen if interest rates rise. Chances are, clients are looking to you for tips on how to protect their funds and balance their portfolios.


Yet, capturing client funds that are wasted on inefficient interest payments should always be a priority. When cash flow planning, that’s one of the main ways to help people save money.

Read: 3 tips to help clients manage money

You can show how paying more interest on debts affects finances by talking about the following issues with clients.

  • Mortgage myopia. A client may assume his interest rates and mortgage payments will remain the same over a long period of time, or he may not know how to plan for fluctuating rates. So, he may have failed to build interest rate-movement assumptions into any financial projections.
  • Amortization risk. It’s easy to compare interest rates, so your client may focus on doing only this when choosing mortgages and structuring his debts. Yet, amortization is one of the main variables he should consider since it impacts the total repayment cost of his debts.
  • Lower rates aren’t always better. Paying 3% versus 4% interest may seem better, but there’s more to calculating the total costs of debts than comparing rates. Along with looking at amortization risks, help your client review all of his repayment options, as well as the total cost of debts over his lifetime.
  • Other debts. It’s the total average rate that your client pays over all debts that actually means something. Consider whether combining all debts into one account may be more cost-effective.


Many advisors help clients save money through tax planning and insurance solutions. But not every planner is proactively showing people how they can save on inefficient interest payments.

Through cash flow planning, you can demonstrate the importance of paying down debt principals quickly, as well as highlight the best ways to reduce exposure to fluctuating interest rates.

Continue on to letter J.

Stephanie Holmes-Winton is a Halifax based financial services educator/speaker who helps advisors find the money to help their clients fund their financial plans. She is the author of Defusing The Debt Bomb & $pent. Stephanie is also the founder and board chair of the Certified Cash Flow Specialist™ designation program. You can reach Stephanie at or
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