Cash reserve goal

What to enter under cash reserve

You should enter a value in the Cash reserve goal, if you want to keep aside an amount of cash for unforeseen emergencies. In the modelling, Pathfinder will keep the cash reserve at the required level and will not use these funds.
The cash reserve will be kept in any of the following accounts (whichever has the best return under the given assumptions):
- Directly help cash accounts (i.e. not in an SMSF or Trust)
- Mortgage offset accounts
- NOTE: The cash reserve will not be kept in the Fixed Term accounts or Insurance bonds, as these are not readily accessible in emergencies. It will also not include any cash kept in SMSFs or Trusts)
Year-by-year, Pathfinder may re-balance which account(s) the cash reserve is kept in. For example, the reserve may initially be kept in cash and then moved to an offset account when a home is bought.
Do not enter as a cash reserve:
- Do not use the cash reserve to save up for an expense. You do not need to tell Pathfinder to save up for an expense, simply enter the expense and Pathfinder will set aside funds to pay for it (for more information, see the Expenses help page).

How to enter a cash reserve

Go to the Cash flows and Goals step (top menu), and the click the Cash reserve sub-step.
Fill in the 'Cash reserve' field. You can use the series builder to increase or decrease the cash reserve year-by-year (for more, see How to use the series builder)

Websolve options

If you want to run multiple scenarios for comparison, it's generally a good idea to keep the same cash reserve in all scenarios (unless there is a good reason to change it). This is because cash typically has a lower return than other investment options, so Pathfinder will usually favour other investments over cash. So, if one scenario has no cash reserve and another scenario has a specified reserve, it is possible for the former scenario to have a better return because Pathfinder has been allowed to invest more funds in an investment with a higher return.

Keep a cash reserve for emergencies

Go to the Cashflows & Goals step (top menu), then the Cash reserve sub-step
Fill in the Cash reserve field with the amount which should be kept in cash for emergencies

Increase or decrease a cash reserve

To increase or decrease the cash reserve values, see How to increase or decrease a value in the series builder.

Some examples of circumstances where you might like to change the cash reserve level include:

If there is a change in their lifestyle which requires a different cash reserve (e.g. a change income, an increase in debt)
Once an individual can make withdrawals from super, you may wish to decrease the cash reserve if they can use their super funds instead.
To resolve a shortfall (see below)

Use the cash reserve to solve a shortfall

You may wish to temporarily reduce the cash reserve to help with a one-off cash shortfall:

Find the year and the amount of the shortfall (for more on this, see How to investigate and fix cash shortfalls)
Reduce the cash reserve in that year by a little more than the shortfall
It's helpful to make a note that the reserve has been reduced to avoid a shortfall
Re-run the scenario - if the shortfall persists, you may need to reduce the shortfall further or find another approach.

Results for the cash reserve

See Cash Reserve results .