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This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and...

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. In general usage, a financial plan is a comprehensive evaluation of an individual’s current pay and future financial state by using current known variables to predict future types of business plan pdf, asset values and withdrawal plans.


This often includes a budget which organizes an individual’s finances and sometimes includes a series of steps or specific goals for spending and saving in the future. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan is sometimes referred to as an investment plan, but in personal finance a financial plan can focus on other specific areas such as risk management, estates, college, or retirement. 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. A financial plan may contain prospective financial statements, which are similar, but different, than a budget. Financial plans are the ENTIRE financial accounting overview of a company. Complete financial plans contain all periods and transaction types.

It’s a combination of the financial statements which independently only reflect a past, present, or future state of the company. The confusion surrounding the term financial plans might stem from the fact that there are many types of financial statement reports. Individually, financial statements show either the past, present, or future financial results.

More specifically, financial statements also only reflect the specific categories which are relevant. For instance, investing activities are not adequately displayed in a balance sheet.

Compilations are a type of service which involves “presenting, in the form of financial statements, information that is the representation of management”. Prospective financial statements are of two types- forecasts and projections. Forecasts are based on management’s expected financial position, results of operations, and cash flows.

Pro Forma statements take previously recorded results, the historical financial data, and present a “what-if”: “what-if” a transaction had happened sooner. While the common usage of the term “financial plan” often refers to a formal and defined series of steps or goals, there is some technical confusion about what the term “financial plan” actually means in the industry. For example, one of the industry’s leading professional organizations, the Certified Financial Planner Board of Standards, lacks any definition for the term “financial plan” in its Standards of Professional Conduct publication. This publication outlines the professional financial planner’s job, and explains the process of financial planning, but the term “financial plan” never appears in the publication’s text.

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