The term ‘financial planning’ refers to assessment of financial requirements and arranging the sources of capital.

Objectives of financial planning include:

i. Proper Utilization of Funds:

• Maximum usage of the available financial resources is the basic aim of financial planning. 
• It is important to ensure that adequate funds are raised at no extra cost.

ii. Adequate Supply of Funds:

• Financial planning includes forecasting the firm’s financial needs. 
• It is important to have sufficient supply of funds to ensure smooth functioning of the organization. 
• There must be enough funds so that the firm does not face any financial distress.

iii. Efficient Use of Funds:

• It is important to manage funds wisely.
• Financial planning aims at supervising the usage of funds because the funds so generated are not only for earning profit but also for the survival of the firm.

iv. Elimination of Wasteful Expenditure:

• Financial planning ensures that no excess fund is raised by the firm.  
• It is important that the firm generate or procure only that much amount which is needed. 
• Any extra cost must not be incurred while raising the funds and the funds so raised should be properly utilized as per the requirement of the firm.
• Any surplus so generated needs to be monitored, so as to avoid its misuse.