Financial Planning

Financial Planning

Definition of Financial Planning

Financial Planning is the process of estimating the capital required and determining its competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.

Objectives of Financial Planning

Financial Planning has got many objectives to look forward to:

Importance of Financial Planning

Financial Planning is process of framing objectives, policies, procedures, programs and budgets regarding the financial activities of a concern. This ensures effective and adequate financial and investment policies. The importance can be outlined as-

Basic steps of Financial Planning

1. Setting Financial Goals

# Financial planner informs client on proper financial goals.
# Set out goals relevant to the interest of the client.

2. Gathering Relevant Data

# The planner leads the client through the process.
# Collect financial information needed to generate a proper financial proposal.
# Use the Financial Wizard to enhance the data gathering process.

3. Analysis of Data

# The data will tell the financial situation of the client.
# Relate the current situation to the financial goals.
# Prioritize the financial goals according to current ability and available resources.

4. Recommendation of Financial Plan

# The planner sets out and develops a set of recommendations to help the client achieve financial goals.
# Once the client selects the most suitable and agreeable idea, funding will be explored to help implement the financial plan.

5. Implementation of Financial Plan

# The planner will help the client to take action through the most appropriate financial tools.
# The client must be motivated to be responsible in going ahead with the plan.

6. Monitoring of Financial Plan

# The financial plan must be constantly reviewed.
# From time to time, comparisons must be made between the plan objectives and the original financial goals.
# The objectives and the actual performance of the plan might differ over time, thus the planner and client must work hand in hand to ensure that the financial goals are achieved as planned.

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