Which of the following is a core component of a financial plan?

Budgeting and cash flow management is a fundamental aspect of a financial plan because it involves tracking income and expenses to ensure that an individual or organization can meet its financial obligations and achieve its financial goals. Effective budgeting allows for the identification of areas where spending can be reduced or controlled, thereby freeing up resources for savings and investments.

Incorporating budgeting into financial planning helps individuals understand their financial situation, prioritize their spending, and make informed decisions regarding their financial future. This core component sets the stage for other elements of a financial plan, such as saving for retirement, investing, and managing debt.

Other options, such as tax evasion strategies or speculative trading, do not align with sound financial planning principles and may even pose legal risks or lead to significant financial loss. While investing in high-risk assets can be part of a financial strategy, it should only be considered after establishing a solid foundation through budgeting and cash flow management.