Navigational tools for your cash flow plan

No two years are alike. To get the best results when managing your cash flow, you must navigate around all financial rough spots you encounter.

Financial planning of any kind can be frustrating. If unexpected expenses or problems crop up, you may not get the cash flow results you hoped for at the end of the year.

The main purpose of structuring your spending isn’t to end up precisely where you predict. Rather, you want to have the tools to steer in the right direction when making major financial decisions, especially when you’re doing so between review meetings with your financial advisor.

Here are three navigational tools all cash flow plans should include:

• Specific recommendations. The first thing you need to know is how much you can spend freely. To figure this out, determine the exact amounts you need to save and use for debt payments, for example, versus the maximum amount you can spend on other daily expenses. Also, structure your debt to make it cost effective and easy to pay off — your advisor can help.
• Written action plans. Plans aren’t worth the paper they’re written on if you don’t follow all prescribed steps. So use a written version of your plan like instructions to consult in times of need. Your plan document must be detailed and clear, and it should list what steps you need to take in plain language. Again, your advisor can help.
• Emergency clauses. Discuss major financial decisions and challenges with your advisor ahead of time. If you try to navigate on your own, you may fail to get help when needed and compromise your cash flow plan.

Stephanie Holmes-Winton is a Halifax-based financial services educator and speaker.