Financial planning is the process of developing a financial plan. A financial plan may take many forms. It may include the establishment of a strict budget or allocate certain funds to meet certain financial responsibilities. It may also address techniques for acquiring additional funds or securing a second income.
Financial planning is essential for an individual to ensure that he/she maintains access to vital funds and successfully addresses all of his/her financial responsibilities. There are two primary types of financial planning: personal financial planning and business financial planning.
Failure to develop an effective and appropriate financial plan can result in adverse consequences. Without a sound plan, an individual can acquire extensive debt which can limit his/her options and hinder him/her from acquiring a loan if necessary.
A consumer may initiate financial planning at any time during his/her life. Many individuals are conscious of their spending from an early age. These individuals may maintain a significant savings account and meet their financial responsibilities regularly. However, some individuals only turn to financial planning after experiencing extensive debt. Developing a financial plan may help an individual address his/her debts and avoid a similar situation in the future.
Financial planning is a technique frequently used by consumers to help them meet financial goals, such as purchasing expensive assets. There are resources available to help individuals establish a financial plan. If an individual is overwhelmed by the process of financial planning, he/she can meet with a financial planning consultant for assistance.