A detailed study of the inflow and outflow of a family’s monies is the core of any financial analysis, whether short term or long term. It allows us to understand tax questions, savings questions and changing income needs in the case of divorce or premature death. It is the basis for understanding retirement income needs, extended retirement projections and long-term health care strategies. An accurate understanding of cash flow captures an undistorted financial picture, enabling a family to plan for and protect itself in the event of unanticipated tragedy.
To understand cash flow is to understand both a family’s financial present and financial future.