What are the three components of a financial plan?

A solid financial plan is built on three key components: budgeting, saving, and investing. Budgeting is essential as it provides a framework for managing income and expenses, ensuring that you live within your means and allocate funds towards savings and investments. Saving involves setting aside a portion of your income for future needs or emergencies, establishing a financial cushion that can help one weather unexpected circumstances. Investing, on the other hand, seeks to grow that money over time through various investment vehicles such as stocks, bonds, or real estate, aiming for financial growth that outpaces inflation.

This combination of managing current resources, ensuring future security, and growing wealth establishes a comprehensive approach to personal finance that can adapt over time as an individual's circumstances change. The other choices, while they contain elements important to financial management, do not encompass the core elements needed to create a thorough financial plan.