Financial Planning Constraints

Constraints of Financial Planning

Though personal financial planning is a process to effectively manage the finances and investments of the clients in order to achieve their financial goals, yet it is not away from constraints. Below are the three important constraints of personal financial planning: 

Inadequate Resources: Though it is advisable to start personal financial planning for 
an individual at an early stage, but inadequate resources constrain the individual in 
doing so. 

Inappropriate Products: Another important constraint of personal financial planning 
is dearth of appropriate products. No appropriate product that suits the investment 
parameters of the investor adds to the constraints of personal financial planning process. 


Time Horizon and Risk Tolerance: Knowing the time horizon is very important, 
when it comes to planning the finance of an individual. Generally, time horizon 
represents the time over which the investment is made or held. Time horizon depends 
on the investor’s objectives. Time horizon is closely bound with risk tolerance level 
of the investor. An investor’s risk tolerance depends on various factors such as age, 
income, financial goals etc.