Commonly referred to as an investment plan, a financial plan involves the use of a budget and other financial instruments to allocate income to the various expenses incurred by an entity. One does not need to be a financial expert to undertake financial planning. An individual can scheme an effective financial plan just by ensuring that all financial obligations are met using the available disposable income. However, coming up with a financial plan for a business entity could be a little bit complex, but an individual with some considerable knowledge in basic finance should not find this task as daunting.

While conducting financial planning for a business entity or government department, the financial plan adopted involves the use of basic financial statements such as the capital budget, balance sheet, income statement as well as the cash flow statement. This allows the financial planner to make a projection of income and expenses for the company, business department or government institution. As such, the estimation of cash needed to fund the upcoming expenditure is conducted. Equipped with the rough estimates of expenditure, an organization or person is able to determine what the source of funding for the expected expenditure should be.

Other than estimating future expenses and matching them with the available disposable income, a financial plan also refers to the means by which cash will be acquired to cover future expenses. Different sources of funding such as borrowing, using current disposable income and using savings may be sought. A company may also decide to offer additional shares as a way of raising capital to meet increased expenditure. The government gets money to fund its projected expenditure mainly through taxation.

A financial plan, whether complicated or simple, should stick to the basic underlying factor which is matching expenses with income. The financial planner should begin by writing down all the expenses and adding them up. He or she should then subtract this sum from the expected monthly income after taxation, net revenue in case of a company, and total revenue collection for a government department. If the financial planner gets a positive result, then the financial future of the entity is safe, and plans should be put in place to ensure the remaining cash is invested in the right investment plans. However, if expenses are equal to the available disposable income or revenue some unforeseen expenses such as medical fees or inflation could end you in trouble. Therefore, it is very important that any entity, whether a person, business entity or government department, puts in place concrete financial planning procedures to secure its future. Solid financial services and a  financial plan should provide an entity with an ideal platform on which to secure their financial future.