Cashflow Pro - Help

Getting Started

Numbers - Just use NUMBERS! Don't insert commas or words or £ or % or other symbols else the sums won't work. You can have a decimal point however.

Where there are orange + or - buttons on the right hand side use these to show or hide stuff. Some tabs can get quite long so hiding things allow you to concentrate and avoid excessive scrolling up and down. These do not affect the eventual output.

Today's Money

Where values are described as being in today's money that means that, whilst the nominal (actual) amounts in future years may have increased by inflation, the values shown have been discounted by inflation to show their real value in today's terms.

For example whilst loan repayments or level annuity income might be a fixed sum each year the actual value of that amount (its buying power) will be eroded by inflation and so in future years its value is smaller in today's money.

This is useful as it allows for valid comparison of values at different times. Often nominal amounts far in the future may seem to be very large because of the compounding effect of inflation, but when seen in today's money its real value can be better appreciated

Introduction Page

Illustration Title - If you are modelling more than one scenario use this to name each one.

Introduction - freeflow and formatable text to set the scene and describe the scenario modelled. Use it in conjunction with the next page.

Life Events Page

Life Events - typically life changing events that are being modelled in the scenario. Such as being made redundant or becoming ill or losing a partner. The cashflow model then shows the impact of these events and may highlight needs for insurance (eg critical illness cover or live assurance) to financially mitigate the outcome in these eventualities.

Select the life events modelled. Add further options to create your own.

Basics Tab

Illustration

Start & End Age - Ages to be covered by the illustration, inclusive.

Retirement Age - Change this and any associated Up To Retirement and From Retirement ages will automatically be updated - allowing quick evaluation of different retirement ages.

Inflation Rate - All amounts are in Today's Money with this rate used to erode the value of a pound each year.

Enable Tax Calculations - Tick this for income Tax to be evaluated with any further tax due appearing as a special Spend.

Cash

Cash is king. All movements of money are via the cash account. A bit like a virtual current account.

Initial Cash - Starting balance.

Interest Rate - The rate of interest on the cash account.

Tax Status - see Tax.

Target Amount - Enable this to try to keep a set cash balance - like an emergency fund. Any cash Surplus or Shortfall at the end of a year will be used to get the cash balance on target before they are used for Investments or Loans.

Adjust Each Year - How the Target Amount is indexed each year - By Inflation will maintain the real value of the amount.

Incomes Tab

Record each income such as salary/wages, state pension etc. But not investment income they go on the Investments Tab.

Income name - keep them short and snappy (eg Salary, Grant).

Tax Status - See Tax.

From Age - The age the income starts. Leaving it blank means default to the Start Age. Tick From Retirement to link it to the Retirement Age.

To Age - The last year that the income is received. (From Age and To Age are inclusive - from 61 to 62 is an income for a period of two years). Leaving it blank means default to the End Age. Tick Up to Retirement to link it to the Retirement Age minus one (so no income at Retirement Age).

Amount - Income amount and the frequency that amount is paid. The total amount for the year is calculated and shown. Remember all amounts are in Today's Money.

Frequency - For a one off spend make the From Age and To Age the same.

Adjust Each Year - How the income Amount is indexed each year - By Inflation will maintain the real value of the amount.

Then - If there is a planned change in the income (say going part-time) specify a Then Amount and a Then To Age. The Frequency is assumed to be unchanged and the new total for each year is shown. If a break is planned then set the Then To Amount to zero and the Then To Age to the last year of the break, then enter the values as a further Then for the income to resume. Remember a blank Then To Age means until the End Age for the Illustration. There is no single payment frequency so if a one off payment is received set the Then To Amount to reflect this payment

Spending Tab

Record each item of expenditure such as utility bills, transport etc etc. But not loan repayments (like mortgages) they go on the Loans Tab. Don't make too fine a breakdown of spending rather group things that will run or the same period and tend to vary similarly over time (eg with inflation or remain level nominally)

Spend name - keep it short and snappy (eg Utilities, Holidays).

From Age - The age the spend starts. Leaving it blank means default to the Start Age. Tick From Retirement to link it to the Retirement Age.

To Age - The last year that the spend is made. (From Age and To Age are inclusive - from 61 to 62 is a spending for a period of two years). Leaving it blank means default to the End Age. Tick Up to Retirement to link it to the Retirement Age minus one (so no spend at Retirement Age).

Amount - Spend amount and the frequency that amount is paid. The total amount for the year is calculated and shown. Remember all amounts are in Today's Money.

Frequency - For a one off spend make the From Age and To Age the same.

Adjust Each Year - How the spend Amount is indexed each year - By Inflation will maintain the real value of the amount.

Then - If there is a planned change in the spend (say cutting down on jet set get aways) specify a Then Amount and a Then To Age. The Frequency is assumed to be unchanged and the new total for each year is shown. If a break is planned then set the Then To Amount to zero and the Then To Age to the last year of the break, then enter the values as a further Then for the spend to resume. Remember a blank Then To Age means until the End Age for the Illustration.

Investments Tab

Investments are for financial investments - like bank savings accounts, share portfolio, pension fund etc and typically (but not always) further monies can be invested or monies withdrawn. They are not for physical investments like a rental property - they go on the Assets Tab. An investment cannot be overdrawn and once exhausted it has zero value.

Investments may Gain in value or pay an Income or both. Be careful not to confuse these concepts and shares are a good example to distinguish between them. A share's price may increase over the year - this is its Gain in value. A share also may pay a dividend - this is its Income.

To further confuse an investment's Income may be Paid Out to the Cash account (like most share dividends) or be automatically Re-invested. One easy mistake is to treat a Re-invested Income as a Gain! For example the interest on a bank savings account is a Re-invested Income (and NOT a Gain in value - even though when the interest is added the valuation goes up…) and is typically subject to income tax (see Tax).

An investment may have associated with it planned activities to add further monies to the investments, make withdrawals or set rules for dealing with cash surpluses or to fund shortfalls.

Investment name - Keep it short & snappy (eg NISA, Shares).

Value - The initial value of the investment at Start Age. Remember all amounts are in Today's Money.

Gain Each Year - How the capital value grows each year. Not to be confused with investment Income.

Income - Amount of income generated as a percentage of the then value of the investment, its Tax Status and whether automatically Re-invested or Paid Out in cash. Not to be confused with investment Gain.

Additional Monies - a planned activity to invest further sum(s) into an investment from the cash account. This is the opposite activity to Withdraw Amount.

Amount - How much to invest and at what frequency.

Withdraw Amount - a planned activity to encash part of an investment and realise a specific sum. This is the opposite activity to Additional Monies.

Tax Status - see Tax.

Amount - How much to withdraw and at what frequency.

Withdraw Portion - a planned activity to encash a percentage of an investment's value at that time.

Tax Status - see Tax.

Portion - the percentage of the investment to withdraw.

Invest Surplus - a rule to allow a cash surplus (if there is one) to be used to add to the investment. Each investment is considered in turn and the rule applied until the surplus is used up. Note that repayment of Loans takes precedence so any with Repay with Surplus rules will be considered before any investment.

Amount - percentage of the surplus to invest.

Minimum - minimum amount to invest in Today's Money.

Maximum - maximum amount to invest in Today's Money.

Fund Shortfall - a rule to use this investment to help fund a cash shortfall (if there is one). Each investment is considered in turn and the rule applied until the shortfall is eliminated. Note that investments are considered before any further Advance to Fund Shortfall by extending Loans.

Tax Status - see Tax.

Amount - percentage of the shortfall to fund.

Minimum - minimum amount to fund shortfall in Today's Money.

Maximum - maximum amount to fund shortfall in Today's Money.

Loans Tab

A loan is a debt that needs to be paid back (eg a mortgage), usually interest is charged. Note that inflation will have an eroding effect on the real value of the loan.

Interest is typically rolled up and simply Added to Loan but the other option allows for it to be specifically Paid In from the cash account.

A loan may have associated with it planned Activities to Repay Amounts, to make Further Advances or set rules for dealing with cash Surpluses or to fund Shortfalls.

Loans are a negative factor of wealth and can be thought of as the inverse of an investment. Once paid off a loan has zero value.

Loan name - Keep it short & snappy (eg Mortgage, Bank Loan).

Value - The initial value of the loan at Start Age. Remember all amounts are in Today's Money.

Interest - the percentage of the outstanding balance charged as interest.

Repay Amount - a planned activity to make specific repayments of the loan from the cash account. This is the opposite activity to Further Advance.

Amount - How much to repay and at what frequency.

Adjust Each Year - For loans with a schedule of level repayments choose No as the real value of the repayments will actually decrease by inflation.

Repay Portion - a planned activity to repay a percentage of the loan's value.

Portion - percentage to repay

Further Advance - a planned activity to extend the loan by an amount. This is the opposite activity to Repay Amount.

Repay With Surplus - a rule to allow a cash surplus (if there is one) to be used to help repay the loan. Each loan is considered in turn and the rule applied until the surplus is used up. Note that loans are considered before any Invest Surplus rules to add to Investments.

Amount - percentage of the surplus to repay.

Minimum - minimum amount to repay in Today's Money.

Maximum - maximum amount to repay in Today's Money.

Advance To Fund Shortfall - a rule to extend the loan with a further advance to help fund a cash shortfall (if there is one). Each loan is considered in turn and the rule applied until the shortfall is eliminated. Note that funding from Investments takes precedence so any with Fund Shortfall rules will be considered before any loan.

Amount - percentage of the shortfall to fund.

Minimum - minimum amount to fund shortfall in Today's Money.

Maximum - maximum amount to fund shortfall in Today's Money.

Assets Tab

An asset differs from an Investment in as much as you either have it or you don't have it (like a house). An asset may be bought or sold.

Asset name - keep it… oh you know already

Value - the initial value if an asset is owned at Start Age or the cost if bought later (in Today's Money).

Adjust Each Year - How the asset's value is indexed each year - By Inflation will maintain the real value of the asset at its initial value.

Buy At Age - leave blank if already owned at Start Age.

Sell At Age - leave blank if still owned at End Age.

Tax Tab

Taxation calculated only covers further income tax that is due. For other types of tax (CGT, Chargeable events, IHT etc use the appropriate calculator and insert the tax due as a spend).

Tax calculations are restricted to basic and higher rate income tax. Do not use for additional rate taxpayers. The allowances and bands in the tax tables are used and these should be adjusted for client's circumstances.

The calculations are approximate and don't take into account every obscure rule! Any further tax that is due is shown as a spend in the following year.

To use taxation start by ticking the Enable Tax Calculations (on the Basics Tab or on the Tax Tab) - this will ensure that the Tax Status of each income is collected.

Tax Status - this indicates how the income is taxed. There are 8 types.

Tax Free - for income that is not taxable (eg NISA, and some NS&I investments)

Taxed Earnings - income tax (and national insurance up to state pension age) deducted at source as PAYE according to the tax code (eg salary).

Taxed Pension - - income tax deducted at source as PAYE according to the tax code.

Basic Rate Paid - basic income tax deducted at source (eg bank savings account). Higher rate taxpayers may have further tax due.

Paid Gross - no deductions at all (eg foreign income). Taxpayers may have further tax due.

UK Dividend -paid net of dividend tax credit. Higher rate taxpayers may have further tax due.

UFPLS Pension - uncrystallised fund pension lump sum (UFPLS) withdrawn from a uncrystallised pension fund investment. A portion (currently 25%) is Tax Free and the rest is Taxed Pension.

Capital - cash from an investment that represents a withdrawal of capital and so is not subject to income tax (but may be subject to CGT).

The calculations are really designed for one person (Client 1) only. However if their partner is a non-taxpayer then select Tax Free for their incomes so they don't add to the taxable income. And if they are both earning similar amounts you can get good results by doubling up the personal allowance and tax bands in the tax tables.

Charts Tab

View the charts.

Tables Tab

View the tables.

Reports Tab

Select what you want included in the downloaded report.

Landscape Charts - these are bigger and so allow more detail to be shown.

Assumptions Page

Include any assumptions made that are not already reflected in the data input.

You can add further options and save them for the future allowing a little library to build up those that are regularly used.

If there is nothing to say then don't!

Conclusions Page

And finally, freeflow and formatable text to summarise any conclusions.