The Importance of Creating a “Parents’ Cash Flow Chart” for your Future | FRIDAY DIGITAL

The Importance of Creating a “Parents’ Cash Flow Chart” for your Future

  • Share on Twitter
  • Share on LINE

Several mail-order appliances upon returning home… turning parents’ “money worries” into “challenges”.

With the COVID-19 crisis, many of us have not been back home for a while.

Returning to their parents’ homes and taking a fresh look at them, one finds that the lives of the elderly are full of risks: disaster prevention and crime prevention, telemarketing and scams, steps in the house, bathrooms that may cause heat shock…the list goes on. Physical and cognitive decline is also a concern. Some of us may have seen a number of cleaning appliances often seen on TV shopping. Then there is the “parents’ pocketbook” situation to worry about.

Izumi Oishi, a financial planner, recommends creating a “cash flow chart for parents’ households” in the age of aging society.

——————&# 8212;—

Have you ever prepared your own cash flow statement?

A cash flow chart is one of the financial statements. A cash flow chart in a life plan is a table that lists the projected amounts of income and expenses, income and expenses, and financial asset balances over the future.

The cash flow chart in a life plan allows you to “visualize” your future financial situation. For example, assuming that the current income and expenses continue, the balance of financial assets at age 100 can be clearly seen at a glance. This allows you to see whether you will have enough or not.

What if I change jobs? What if my child studies abroad? What if I renovate my home? If you change the assumptions, you can estimate various patterns.

In creating a cash flow chart, it is necessary to understand the household budget and the “assumptions” mentioned above. Assumptions refer to a life plan. The current income, expenses, and financial assets are clarified, and future values are projected based on the life plan.

This process and the results enable early detection of financial issues, and if there is a shortage of funds, the plan is revised to address the current situation. For business people, the PDCA cycle is easy to understand.

A cash flow chart is a powerful tool to turn future money concerns into challenges.

If your parents’ house has a number of cleaning appliances that look like something you see on TV shopping, you may need to be careful.

Parents who have increased extravagant behavior that they never had before

The request of Mr. A, a man in his 50s, was clear.

My life is going well. His parents in the country are healthy and doing well. Recently, they have been indulging in extravagant activities that they had never done before, such as eating out together and going on trips. When I asked him about it, he told me that he had received a lump-sum payment for something and that it was his war fund.

Perhaps because he did something he was not used to doing, his 80-year-old father was hospitalized with a leg injury. His mother had to live alone for a while.

“The mother tends to spend rather profligate. She will probably have to spend more now that she lives alone. Considering the father’s discharge from the hospital, we would like to consider making the family home barrier-free. It may be necessary to consider placing both parents in a facility for the elderly in the future. Do you have the funds? Will I, as the eldest son, have to bear the burden.” He says that his concerns came to his mind one after another after his father’s hospitalization.

Mr. A chose to create a cash flow chart for his parents’ household. The preparation of a cash flow statement is based on the premise of an “inventory of assets,” and it was the best choice to address Ms. A’s concerns.

The first step was to understand the current situation. Income (pension, etc.), expenses (living expenses, etc.), valuation of financial assets (including cash and deposits), insurance coverage, and liabilities are all checked. In addition, we calculate the expected future medical expenses, nursing care expenses, house repair expenses, etc.

During this process, we also uncovered details of the lump-sum payments that had been the source of funds for his parents’ travel and other expenses. He had been notified of his mother’s private pension, which he had forgotten about, and said that he had received it in a lump sum. Mr. A wondered, “Was it right to receive the pension in a lump sum?”


A basic cash flow chart was created, and several patterns were created, including a plan to remodel after one year, and a plan in which the father, followed by the mother, would enter a nursing home at different times, to verify the issue.

As a result, it was found that the renovation budget was more than Mr. A had expected. It will be inconvenient during the construction, but I think my parents will be happy. As a son, I am relieved that my parents can live comfortably in their home.

In preparing a cash flow statement, the family’s financial figures are of utmost importance. The disclosure of this information was made possible by the relationship of trust between the parents and Mr. A.

The parents’ attitude may have softened if the parent had told them, “You can spend this much,” instead of the conventional approach of “You’ll have less allowance.”

A mother who refuses to disclose information, saying, “I don’t want my allowance to be reduced.

Ms. B, a woman in her 50s, was confronting her mother, who was experiencing doubts and fears.

Her father passed away several years ago, and Ms. B’s mother lives alone in a large house. Her mother has many friends, and Ms. B is concerned that she seems to be spending money every time she goes out. Her mother manages the money and her two daughters have no idea. She is grateful to her grandchildren for their generous New Year’s gift money, but she is always asking her mother, “Don’t spend it too much! What are you spending it on?” 

Mr. B and his sister are worried about their mother, who has recently become noticeably forgetful, and have begun to consider selling the family home and moving into a facility.

There was no way that their father’s inheritance would last forever, and the challenge was to fund the admission to the facility, their mother’s living expenses, and to persuade their mother to stay. The best way to make day-to-day living expenses would be to stay within the survivor’s pension. However, that is unlikely to cover his mother’s entertainment expenses. The mother continues to refuse to disclose information, saying, “I don’t want my allowance to be reduced.” Recently, she has been refusing to discuss the matter, saying she does not want to be told this or that.

Negotiations are drawn out into a protracted battle.

Therefore, we decided to implement a strategy to visualize the situation using a cash flow chart. We prepared a chart that included the expected sale price of the family home and the cost of facilities, assuming the mother’s basic living expenses and entertainment expenses. The mother, who had been stubborn at first, softened her attitude by saying, “I can spend this much. The mother’s image that her allowance would be reduced was successfully dispelled.

The mother herself began to realize that her cognition was declining, and the example of her friend who was living gracefully in an institution also gave her a boost. Thus, the full picture of the mother’s money was revealed.

The mother has since entered an institution, the family home was sold under the desired terms, and the mother is now living in good health.

This is an example of how Ms. B’s persistence and commitment to her mother brought about a safe and comfortable life for her and peace of mind for her daughters.

Key Points for Preparing a Cash Flow Chart

We have already mentioned the importance of understanding household finances and life planning when preparing a cash flow chart. It goes without saying that the more accurate the household financial figures are, the more accurate the cash flow chart will be.

When recording numerical information, it is important to keep in mind that income should be small and expenses should be large. As the numbers accumulate from year to year, even the slightest error will add up over the span of 20 or 30 years.

Even if the numbers are somewhat inaccurate, it is worth making one. It is very important to see how money moves in a cash flow chart. Check for periods of peaks and valleys in your savings balance. Even if the depth of the peaks and valleys (the amount of money) is not accurate, if you know where the peaks and valleys are (when they occur), you will know when to save, when to spend, and when to work hard, and you can plan how to respond.


In addition, the rate of price increases will be important in creating a cash flow chart in the future. If you compare a plan with a 0% rate of increase with a plan with a 2% rate of increase, you will be shocked at the difference in results. For workers, the key point is how to set the rate of wage increase. There are a number of other variables, such as mortgage rates and rates of return on financial products.

Comparing a basic plan with a “0%” rate of price increase to a plan with a “2%” rate of increase.

A cash flow chart is not complete once one plan is created. A cash flow chart is a guideline. It can be compared to a compass for the long voyage of life. It should be reviewed according to circumstances. The same goes for a life plan. Just because you have a plan does not mean you have to live by it. First, I would like to challenge you to create the first version of your plan.

  • Text Izumi Oishi

    Certified Senior Financial Planner CFPⓇ by the Japan FP Association. Career consultant. After graduating from university, joined Recruit Co. Ltd. for about 15 years before establishing his own FP firm in 2001. He has been offering lectures and training courses on economic education, career design, and asset building to universities and companies, using familiar newspapers for men and women of all ages. For individuals, he provides objective financial planning and life and career planning. He was recognized by the Financial Services Agency and the Bank of Japan for his work in promoting financial literacy, and was named a Financial Knowledge Dissemination Achiever for 2002.

Photo Gallery3 total

Photo Selection

Check out the best photos for you.

Related Articles