WHAT IS FINANCIAL PLANNING
A financial plan is a comprehensive picture of your current finances, your financial goals, and any strategies you’ve set to achieve those goals. Good financial planning should include details about your cash flow, savings, debt, investments, insurance, and any other elements of your financial life. Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives.
OBJECTIVES OF FINANCIAL PLANNING
Financial planning is done to achieve the following two objectives:
To ensure availability of funds whenever these are required: The main objective of financial planning is that sufficient funds should be available in the company for different purposes such as for the purchase of long term assets, to meet day-to-day expenses, etc. It ensures the timely availability of finance. Along with availability financial planning also tries to specify the sources of finance.
To see the firm does not raise resources unnecessarily: Excess funding is as bad as inadequate or shortage of funds. If there is surplus money, financial planning must invest it in the best manner as keeping financial resources idle is great for an organization.
Financial planning includes both short term as well as the long term planning. Long term planning focuses on capital expenditure plans whereas short term financial plans are called budgets. Budgets include a detailed plan of action for a period of one year or less.