Financial planning means creating and employing plans to meet defined financial objectives. The firm must decide in advance how it will arrange funds for its working capital requirements and for investment in long term assets. This process of estimating the fund requirements of a business and determining the sources of funds are an important part of financial planning. Financial planning takes into consideration the growth, performance, investments, and requirements of funds for the business for a given period of time. It provides a detailed plan of action for reducing uncertainty and for the proper direction of individual and group efforts.
For an individual, financial planning means deciding in advance how much to spend, and what to spend on, based on the funds at his/her disposal. This includes tax planning, investment planning, insurance planning, mortgage planning, retirement planning, and savings planning .There are a wide range of investment opportunities available to the public. People are often confused as to which is the best choice to suit their budget. The funds available must be prudently invested. One has to consider the profitability, liquidity, and safety of the various investment opportunities before investing in them. Investment of funds in fixed assets has long term implications as the funds would be blocked for a long duration and their benefits could not be realized in near future. The planning of an individual?s finance involves a careful study of the current economic conditions. This enables them to plan their financial matters efficiently and achieve their financial goals successfully.
