What Are The Limitations Of Financial Planning?

In connection with the financial planning resources will have to be mobilized through taxes and deficit financing. The taxes will affect marginal propensity to save. While the deficit financing will the cause result, inflation. Both these situations will jeopardize financial planning.

In case of UDCs there is financial dualism, non monetized sector of the economy and very small organized markets. Because of these problems, the imbalances will rise in between supply and funds and demand for funds thwarting the financial planning.

For the sake of balances if supplies are increased with the help of imports they will have negative impact on the balance of payments. In this way, equilibrium could not be maintained in between demand and foreign exchange and supply of foreign exchange obstructing the financial planning.

Financial planning will be successful if it is free from the bottlenecks like rise in prices etc. because of rise in prices the financial targets of the plan will suffer. This is the reason that financial planning is considered more relevant for sectoral planning than for overall planning.

Although there a lot of limitation in the financial planning but it is also considered that it is the best source to maintain how to utilize your financial resources.