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Financial planning, whether personal or corporate is a very important step in the right direction towards financial freedom (Boone & Kurtz, 2012). One needs to plan for the future to cushion against the risk of the unknown. This essay will discuss concepts that one can use to consolidate his financial position in the future. An analysis of the short term and long term effects of failing to plan for the future will also be highlighted.
Financial concepts in financial planning
Three concepts are very vital for consolidation of personal financial future. These concepts are discussed in the ensuing paragraphs.
One of the concepts is saving. Meticulous saving allows one to have finances which he or she can use in the future to ensure that financial position is not compromised.
Another concept is the concept of budgeting. One should avoid impulsive buying and budget wisely and carefully to ensure that the finances one has are not overstretched.
Investing is also another very important financial concept. The excess cash from the normal spending should be put away in income generating activities. Cash flow from these activities ensures that financial future is bright.
Short-term and long-term effects of failure to plan well financially
If one fails to plan, adverse effects could be felt both in the short run as well as in the long run. The short –term effects could be lack of finances to take care of the daily needs, and lack of cash needed for survival on a day to day basis. Examples of long term effects are one may become heavily indebted and might take too long to repay. Financial independence would not be achieved.
Conclusion
No one desires to experience the adverse effects mentioned here that are associated with failure to have a concrete financial plan. As such, people should struggle to ensure that they have applied the concepts named above wisely so as to avoid having financial lapses and complications.
