I often explain to folx that Brooklyn Plans is a “cash flow first” financial planning firm. I want to take the opportunity to break down more about what that means. Let me start by giving the lay of the land first though. I will say most financial planning and wealth management firms do not want to spend a lot of time tinkering with cash flow i.e. inflows and outflows or what most of us call a “budget.” A lot of consumers seem to feel that is something financial advisors will help with, but the truth is that most of them really aren’t trained in the behavioral economics, tools and strategies that are needed to help people improve spending habits. They’re also not so great with helping folx manage and pay off debt.
The mainstream industry really wants you to know how to save when you come in the door, and have funds available for saving and investing, because that’s how most firms make their money – through investment management. If you need money, say, to buy a house, repay debt, or because you’re overspending, I’ve heard of “financial advisors” suggesting some crazy things to avoid withdrawals from investment accounts, which will hurt their bottom line.
So, the reason we start with financial planning first, and cash flow as the first step, is because even in the case of our multi-million dollar clients, we need to know what is coming in and out, if it’s sustainable, and how to improve retention of the funds coming in. If a client inherits 5 million, and proceeds to purchase properties worth 3 million (not hard to do in NYC) and is drawing down substantial assets to supplement income at age 40, the trajectory for retirement can easily still be dismal.
Even for our clients who are savers, many of them come to us with a lack of clarity on timeframe, and appropriate investments to meet their goals, so starting with cash flow and having a clear understanding of how much additional savings they can set aside from each paycheck allows us to make a game plan to reach their financial goals.
Simply put, cash flow is the foundation of the rest of the financial plan. If you are cash flow positive, meaning more money is coming in than going out, then you can save, invest, and repay debt. If the reverse is true, then your options are limited until the situation can be addressed. Even for those who are saving, there is almost always room to improve that buffer or a better way to structure how the savings are allocated.
For all these reasons, Brooklyn Plans LLC does financial planning first before introducing the option for investment management and cash flow first before the later steps of a financial plan. The whole point of understanding cash flow is to create a meaningful plan to save and build wealth. Join us this month for a free “Lunch with an Advisor” with me, Kristen Euretig, CFP® and Calli Case, CFP® as we discuss our approach to helping clients structure spending so that they can save more. Details are below.
Free event: October Lunch with an Advisor – How to save more by structuring your spending
Join Calli Case, CFP® and Kristen Euretig, CFP® as they talk about how they help clients to save more with a structured spending plan. They’ll also chat about:
- Identifying spending leaks
- Tips and tricks for streamlining spending
- Why expense tracking doesn’t work and what to do instead
- Why using credit cards makes it harder to budget
Plus, live Q&A so you can ask our Certified Financial Planners your finance questions.
Date: Tuesday, October 26th
Time: 1 PM – 1:30 PM ET
Sign up link here.