What is Financial Planning?
a) oh please, no
b) about as interesting as a wet weekend in (insert seaside destination of choice)
c) Naggingly, I kind of get this might be important.
Actually, all three responses are valid.
Financial planning is recognising you have a future to plan for (see 'Plan') and organising your finances accordingly.
In general, a financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or bills, and also reserves and allocates some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future growth or income, such as a new business or product line, shares in an existing business, or property.
In business, a financial plan can refer to the three primary financial statements (balance sheet, income statement, and cash flow statement) created within a business plan. Financial forecast or financial plan can also refer to an annual projection of income and expenses for a company, division or department. A financial plan can also be an estimation of cash needs and a decision on how to raise the cash, such as through borrowing or issuing additional shares in a company.
While a financial plan refers to estimating future income, expenses and assets, a financing plan or finance plan usually refers to the means by which cash will be acquired to cover future expenses, for instance through earning, borrowing or using saved cash.
This makes the notion of financial planning important. Potentially life-changing. Definitely life-shaping. After all, money and assets are the ongoing fuel for modern day life. No fuel, or diminished fuel and then your future is impacted. And not in a good way. More fuel, more possibilities. It’s that simple.
So let’s hear it for financial planning. Learn to love it. We do.
So much that if you get in touch we can introduce you to a nationwide network of chartered financial advisers whose role is to help you do that. Plan your finances. Get in touch. We’re nice. And they are, too.