Financial PlanA financial plan is a document that details the financial organization of the company or the inflow and outflow of an individual. It enables an individual to effectively plan for the finances that he or she receives during a certain period of time. The document also takes into consideration of the age of the parties that are being involved(Artikis 2007). Reasons for Financial PlanningFinancial planning enables individual to plan their finances so as to be certain on the way to use their money. It enables them to know which policies to use in order to ensure that they survive in competing world.
There are many factors that have led to the need of financial planning in Australia(Fraser 2001). The age groups who are working are not diverse. Majority of the people who are working currently are old. The birth rate has significantly reduced in many countries. This means that in the future there will be a high number of people in retirement age and less number in the production age. It is therefore imperative for the government to come up with effective policies to ensure good financial planning.
The death rate on the other has also reduced. This means that there will come a time when the number of older people on retirement will be more than the people who will be working. The older people need to put up mechanisms that ensure that they remain productive even after their time of retirement(White 1998). The study has also show the trend of long levity nowadays. The lifespan in most parts of the world is 79 years for women and 75 for men.
There are so many years that an individual is expected to live after retirement scheme. They need a good financial plan for their earnings and investments and for their lives to live(Artikis 2007). Financial planning ensures that there is proper management of the scarce resources that are available. The risk of understating or overstating of the finances is minimized through financial planning(Fraser 2001). . Financial planning is a forecast of how cash will be spent in the future of the business. If there is no financial planning, the finances of the company are exposed to the risk of misappropriation. Financial planning ensures that the available finances are used for the intended function(White 1998).
During the course of business transaction there are many activities that are involved. At times, there are instances where unforeseen opportunities occur. In the event that the available resources are not planned for, they will be used. This may affect the operations of the business. A business should be treated as a separate entity from the needs of the owners. Financial planning provides a good platform over which chronological events occurs as they have been planned.
The resources that the company has are effectively used. A good financial planning enables a company to grow both in assets and returns. Financial planning ensures that there is proper management of the scarce resources that are available. The risk of understating or overstating of the finances is minimized through financial planning. Financial planning is a forecast of how cash will be spent in the future of the business. If there is no financial planning, the finances of the coupleis exposed to the risk of misappropriation