The Flows in Your Plan

By David Chazin

For most Chevron employees -even those with significant wealth-a secure financial future doesn't simply happen. Instead, it must be carefully crafted to help meet your most important goals and leave nothing to chance. Of course, the future is unpredictable and your own personal situation changes over time, making it all the more challenging to answer the most crucial of financial questions: Are you on track to achieve your financial objectives?

As a Chevron employee looking to make the smartest possible decisions about your ESIP, CRP, stock options, and other moneys, you need a comprehensive understanding of your current financial situation and a reliable roadmap of where you're headed. The key lies in an important but often overlooked component of the financial planning process: cash-flow planning.

In short, cash-flow planning helps you determine if you'll accomplish your goals and live the life you desire. It can give you the knowledge to better control your financial destiny. At a basic level, cash-flow planning is the process of analyzing your annual income sources, such as salary and investment income, against your annual income uses, such as debt, living expenses and taxes-in short, "money in" versus "money out."

Analyzing Your Personal Balance Sheet
You should look closely at any software you use to keep track of your income and expenses (and if you're not using any software, you should definitely consider it). Common programs for this include Quicken, Excel, and, which all offer basic tools that break down your past financial habits and give you an idea what might happen in the future.

If you work with a full-fledged financial planner (and not one of the so-called "financial planners" who are really only interested in managing your investments when you leave Chevron), you can employ advanced computer modeling to develop important scenarios about your financial future by projecting your cash flow, asset growth potential, taxes, the size of your estate and other relevant financial data over the full length of your life expectancy. This will allow you to complete a series of "what if" situations that are designed to assist you in making intelligent decisions regarding a series of objectives.

Armed with such knowledge, you can analyze whether your current financial plan is adequate-or whether you need to make any changes to stay on course. You'll also be well positioned to make financially sound decisions as new needs arise, such as financing an education for a child or grandchild, purchasing a vacation home or disposing of a highly appreciated asset such as Chevron stock or real estate.

Consider the ways cash-flow planning can enhance just a few elements of your overall financial plan:

Retirement planning. Cash-flow planning analysis allows you to estimate the growth of your overall net worth each year, based on the specific financial strategies you use or are planning to use, as well as the impact of taxes and inflation. You can evaluate that information to assess if you're sufficiently saving in your ESIP and other accounts and building wealth fast enough to help reach retirement on schedule and in the way that you envision. Likewise, cash-flow analysis will enable you to create the optimal retirement income distribution plan built around your specific needs to help ensure you don't outlive your savings.

Debt management. As the asset side of your balance sheet grows, so too may the liabilities side. Cash-flow planning analysis can help clarify the long-term impact of your debt and expenditures. This exercise can help lead you to new, more cost-effective strategies for managing your liabilities and freeing up cash for more effective and profitable uses. You may also want to consider setting up an emergency fund (such as six months' worth of living expenses) just in case you're no longer able to earn a regular income.

Estate planning. Without proper planning, estate taxes may significantly erode much of the estate you plan to leave to your heirs. But the cash-flow planning process can help your heirs avoid unpleasant surprises in the future by estimating your estate tax burden and other related costs. You should work with a financial planner to implement estate tax reduction strategies that give you maximum control over the disposition of your assets.

Regardless of your goals, the process of cash-flow planning can provide you with the roadmap you need to make informed, confident decisions regarding your wealth and your financial plan. Considering the current environment at Chevron, now is a good time to run a cash-flow analysis, or conduct a new analysis based on any updated information.

We'd be happy to sit down with you for a review of your existing cash-flow planning and finding any areas that need to be tweaked. Because we work with many Chevron executives, managers, employees and retirees, we're very knowledgeable about your various compensation plans and benefit offerings, plus other issues specific to the employees (in addition to the retirement, investment, and estate planning issues everybody faces).

Please contact us at (925) 659-0217 with specific questions or to schedule a time to meet in our San Ramon, Point Richmond or Houston, TX offices. Also, follow us on LinkedIn.

David Chazin, Insight Wealth Strategies and Lincoln Financial Advisors Corp are not affiliated with Chevron.