Short Term vs Long Term Financial Planning - Essay Example

(Johnson & Scholes, 1993: 333) In simple words, financial planning concentrates upon the prudent utilization or resources by applying financial tools in order to obtain the established, designed and planned financial goals within some specific time period. Man devises different business schemes and acts upon them in order to achieve his destination in life. These strategies, plans and schemes may either be on the short term or the long term bases. Hence, planning is inevitable in the everyday routine-work of human life.

Both short term and long term financial planning contains divergent characteristics, which are as under: Short Term Financial Planning: Short term financial planning refers to the financial arrangements, which are made, for the short and limited period of time, with the intention of getting immediate outcomes and results. Salient features of short term financial planning include: Short term financial planning is considered as the best one in respect of allocating money for the limited period of time for the earning of profit as well as for better future perspectives.

The first and foremost issue in a short term planning is the assessment of one’s personal resources as well as the estimation of cash flow and the source from where the cash could be generated at the eve of emergency. It helps the individuals and firms run their financial affairs in a smooth way without any type of interruption, break or disturbances. Aims, objectives and goals of short term planning are mostly crystal clear and precise; there is almost no ambiguity in the description of goals and the achievements of such goals.

It is therefore, short term planning meets with all the goals established and determined in this direction. In addition, the objectives of short term financial planning are accessible, simple and within small budgeting. Hence, the probability of short term financial