What is the primary purpose of financial planning?

The primary purpose of financial planning is to effectively manage finances to meet future goals. This process involves assessing an individual's or organization's current financial situation, setting realistic financial goals, and creating a structured plan to achieve those goals over time. It encompasses budgeting, saving, investing, and preparing for financial challenges, ensuring that resources are allocated in a way that supports both short-term needs and long-term aspirations.

Financial planning is not solely focused on minimizing expenses or eliminating debt, nor is it primarily aimed at maximizing short-term profits. Instead, it takes a holistic view of financial health, enabling individuals to anticipate future needs, such as retirement, education expenses, or major purchases, and to develop strategies to meet these goals in a balanced and sustainable manner. By establishing a comprehensive financial plan, individuals can make informed decisions, improve their financial literacy, and build a secure financial future.