Resource Center

Why does my client's savings look so low?

The answer lies in allocating excess cash flow to goals

First, check Settings>Assumptions for your setting on Excess Cash Flows.

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If it is set to "Spend", any positive net cash flows left over in any given year will disappear from the plan, under the assumption that the client spent them. If it set to "Save", those positive net cash flows will be saved to be used towards the client's financial plan. By default, the excess funds saved will accrue in a cash balance account with the cash rate of return.

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In the "Additional Savings" area of the What Ifs in the Financial Plan>Recommendations, you can earmark any given year's excess cash flow to goals. By default, the allocated Additional Savings amount will continue through the simulated scenario. In other words, if you allocate $2,000/month of additional savings, the maximum cash flow earmarked in future years will be $24,000 (in future dollars, with reallocation after goals are complete). However, you may have a scenario where a loan is paid off or new income is generated and future available cash flow increases.

To have these funds earmarked towards a goal and the goal's proposed Asset Allocation instead of a general cash balance account, navigate to Financial Plan then Recommendations. Click on the "What Ifs" button if the gray What Ifs section is not already open.

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Navigate to the Additional Savings tab of the What Ifs and click the "Allocate excess cashflow to this goal" check box, then click the green "Save" button to save your changes:

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If you select this check box on more than one goal, the excess cash flow will be divided among them proportionately based on their current allocation.