How Cash Flow Forecasting Can Help In a Wealthy Divorce

This post is about some essential software that financial planners use to help you understand your finances during divorce and help you understand if settlements work for you.

The software is called Cashflow Forecasting, and it's not something all financial advisors pay for.

It's an important thing to ask of your financial planner when you're going through a divorce and when you're choosing who to work with.

The aim of Cashflow Forecasting is for us to be able to get a picture of your incomings and your outgoings, exactly what you need until age 100.

We can then use the software to stress test any offer that you are made.

Essentially, what we're using the software to do is help us answer the what if scenario's to be confident about what you're going to get from your settlement and if it works for you.

Suppose we take the example of client Jane and consider her life from age 56 up to age 100. Where we start with the software is to consider her expenses every year until this age.

We would factor in for Jane that her expenses are going up in line with inflation, and then we have them drop predominantly when she gets to later retirement.

That often happens with clients because they have a very active early retirement. And then we get to an age where you're going on holiday less et cetera, so your outgoings go down.

Next, we would consider what income Jane would have over this period.

If Jane was made a proposal, say ￡10,000 a month spousal maintenance that she was going to get until age 65, we could use the software to see whether or not this would work for her.

In this example, let's imagine the software shows us that from this proposal, Jane wasn't going to have enough money to live on in retirement.

It allows us to think about, okay, what do we do?

How do we make this work? As well as going back to the other party.

We can compare the plans next to each other and think about different 'what if' scenarios.

We can be creative about how we can make the proposal work or alternatives.

So, that was Jane's situation. Obviously, everybody, every client's situation is slightly different. And what we do is we input your personal situation into the software, and then we start to think about how things could work for you, what settlements could work and if you've been given a settlement, we can stress test how that might play out for you as well.

We can put this then into a report that you can use during your mediation or during your divorce.

If you're going through court, you can use just to say what it is that you think you need and why, with some evidence that goes with that as well.

So, that's Cashflow Forecasting or my 'what if' scenario software, as I like to call it.

I hope that's been super useful. It's something during wealthy divorce because the money can have such an impact, and the changes that can happen during a wealthy divorce can be substantial