Why might someone need to create a financial plan?

Creating a financial plan is essential because it serves as a comprehensive framework for evaluating one's current financial situation while simultaneously setting achievable future goals. This process involves assessing various aspects of personal finances, including income, expenses, savings, investments, and debts, which provides clarity on where an individual stands financially.

By establishing future financial goals—whether it's saving for retirement, planning for a major purchase, or funding education—individuals can develop strategies to reach those objectives. A well-structured financial plan allows for informed decision-making, prioritization of resources, and adjustments to spending habits in alignment with defined goals.

Other options focus on narrower or less beneficial aspects of financial management. For instance, merely tracking daily spending may help manage finances in the short term but does not provide a comprehensive view or future direction, which a financial plan does. Avoiding taxes on investments and minimizing all expenses immediately may lead to more significant financial issues in the long run and does not address the holistic nature of financial planning. Thus, the broader perspective presented in the correct answer highlights the importance of a financial plan as a tool for long-term success and stability.