Study of financial planning

Study of financial planning

Study of financial planning



In today’s world, banking is not just about accepting deposits and sanctioning loans. The banking industry has come a long way by providing every bit of service that aims at maximizing wealth of its customers. In such a scenario, as a banker you should be well versed with the latest equipments of maximizing wealth and adding value to your customer service. Remember – there is a lot of competition in the market. If you don’t do it, somebody else will!



The subject of Financial Planning will help to build a solid foundation in not only enhancing your business targets and efficient customer service in planning one’s wealth, but also to develop skills necessary for being a good financial adviser.


What is financial Planning ?


Financial planning can be defined as a process of developing strategies for using financial resources to achieve short term and long term financial goals.


In  other words Financial planning, as a process, involves detailed study of an individual’s financial position (asset- liability position) as on a particular day. It is on this basis that his future financial needs are planned. Financial planning process is not a recent phenomenon. It existed since the advent of money, when people thought of different ways to manage their wealth.


Need for Financial Planning


An individual has different financial goals that need to be taken care off at different stages of his or her life. Figure 1.1 represents financial goals that vary from buying a house or a car, education and marriage to marriage of children to retirement. Therefore, based on these needs and ambitions, one has to prudently plan the steps to achieve the goals. People tend to use their income for meeting their immediate needs. Sometimes these needs are also met with the help of borrowings. However, a proper financial planning helps to channelize  the income. This should be done in such a manner that the long term and short term goals are systematically taken care of. This is done through a detailed study of individuals:

Current financial status

Monetary obligations


Risk appetite


Scope of Financial Planning


Based on the definitions of financial planning given in above  the scope of financial planning involves:


  • Understanding the financial needs
  • Knowing one’s financial goals
  • Setting a way to achieve the financial goals/ targets


It is also important to note that the non-financial aspects of an individual include his or her:

Marital status



Personal priorities


However, this will help in a detailed planning to meet the financial targets. These financial goals can be well achieved with the help of ‘Financial Planners’.


Elements of Financial Planning


  • Identifying financial needs
  • Converting needs into monetary terms
  • Classifying the financial goals
  • Planning to achieve these goals
  • A sum of all these financial elements would help the financial planner to suggest suitable savings and investment options to his client.


Components of Financial Planning


Financial planning is a customized tool suiting the needs and requirements of an individual based on his income, lifestyle and preferences, though it differs from one person to another.


  • Cash Flow analysis
  • Risk analysis
  • Banking requirements
  • Short Term and Long Term Risk planning
  • Loan and Credit facilities
    • Retirement
    • Estate planning
    • Tax planning
    • Health care and medical needs


Financial Planning Process


Financial planning is often termed as a process. It is so called because it involves a step by step procedure of identifying monetary objectives. After identification, the monetary objectives are classified into different time frames of ‘short’, ‘medium’ and ‘long term’. The process then involves keeping in mind the non-financial aspects of an individual which includes his or her:

Marital status



Personal priorities


Building client-planner relationship

Gathering client data – Financial and to some extent non-financial/personal

Valuation of client’s financial status

Presenting the financial plan

Implementation of the plan

Monitoring the laid plans


What is meant by Financial Planning Goal


Financial goals – short term, medium term and long term plans help achieve their  financial   Plans , so that the goals can be achieved in a systematic and organized manner.


Hence Financial planning is the process of understanding the monetary position of an individual to fulfill the needs especially with the help of professionals called financial planners.



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0 # Harikiran 2017-01-04
I am from Bijapur, I have scored 82 percentile in CAT this year. Please let me know the colleges where i can get admission
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