What is financial planning?

Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set. The financial plan describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the timeframes involved.

The Financial Planning activity involves the following tasks;-

• Assess the business environment
• Confirm the business vision and objectives
• Identify the types of resources needed to achieve these objectives
• Quantify the amount of resource (labor, equipment, materials)
• Calculate the total cost of each type of resource
• Summarize the costs to create a budget
• Identify any risks and issues with the budget set

Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps the CEO to set financial targets for the organization, and reward staff for meeting objectives within the budget set.

Why is financial planning important?

Financial planning is not the same as financial advice. It is not a recommendation to purchase a particular product but an evolving action plan, regularly reviewed to ensure that your goals are met.


The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan on how you can meet your goals given your current and projected situation.

In practice this strategy will utilise available tax allowances, target liquid assets into appropriate vehicles, ensure your investments are structured correctly and managed professionally. Having created a plan you will be able to understand how each decision you make affects other areas of your finances and you can consider the short and long term effects on your goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

However, the true objective of financial planning is to ensure that this strategy is not neglected and its value is not diminished. Only through regular reviews can you ensure that you remain on track to meet your goals and maximise new ideas and opportunities.