What is a financial plan?

A financial plan is primarily recognized as a comprehensive evaluation of an investor's current and future financial state. This involves a detailed analysis of different financial aspects, including assets, liabilities, income, expenses, risks, and investment goals. A financial plan is designed to help individuals or families make informed decisions about their money over the short and long term, including how to save, invest, and build wealth. It takes into consideration various factors like retirement plans, insurance needs, tax implications, and estate planning, ultimately guiding individuals in achieving their financial objectives while managing risks effectively.

The other options are narrower in scope and do not encapsulate the essence of what a financial plan entails. While calculating daily expenses and creating a yearly budget are important elements of personal finance, they do not provide the comprehensive overview that a financial plan requires. Simply investing in stocks and bonds represents only a part of a broader investment strategy and fails to address the overall financial health and planning needed to reach long-term goals.