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Seven Financial Planning Hacks Only the Pros Know

May 19, 2021, 8:00 AM

The world of finance is like an endless maze to the lay person. Such individuals look toward a financial advisor for assistance in financial matters, especially with financial and tax planning. Individuals and organizations need to avail themselves of financial advisors’ services to do the right thing with their money.

You don’t have to be a Certified Public Accountant (CPA) to provide financial advice, but if you are, it improves your credibility. If you haven’t already done it, you could register for a CPA review course and get qualified.

As a financial advisor, you have a crucial role in providing financial guidance to your clients. It is a great responsibility to offer advice on how to use money that is not yours. Knowing a few useful hacks in financial planning can come in handy.

Pro Financial Planning Hacks You Can Use

First off, you need to realize that what works in one set of circumstances may not work in another. Hence, you need to exercise discretion while applying the hacks featured in this article.

1. Separate Bad Debts From Good Debts

When you look at a personal or business account, one of the first things you should do is look at the number of debts, types of debts, and each one’s status. There are two types of debts, good debts and bad debts.

The client shouldn’t be overusing credit cards or running up credit accounts by indiscriminate borrowing. They should neither be spending money they don’t have nor spending more than they earn.

Bad debts like overdue credit cards will also generate a bad credit score. Good debts like mortgages and car loans, however, are acceptable provided that they are appropriately monitored. They also serve to improve the credit score.

2. Make a Budget

A client might find this step boring, but it is an integral part of sound financial planning. Any individual or organization needs to create a budget that sets the allocation of funds that become available every month.

You can rectify past mistakes today to secure a better financial future tomorrow with the help of a budget. You can only achieve financial control if you have all the relevant information at hand to process it constructively.

Collect all bills, bank statements, salary slips, payment vouchers/details (in case of self-employed individuals), and other such information. You will have to list the monthly expenses and put them under the heads of fixed and variable costs.

Once you have listed out the monthly expenses, you can identify where you can reduce costs to set aside money for savings and investment. But we will deal with that aspect later on in the article.

3. The Need for an Emergency Fund

An essential aspect of financial planning is to expect the unexpected. That’s why we have insurance. But insurance will not cover all contingencies, and for specific scenarios, you need to have an emergency fund in place.

Loss of job, an accident, property loss—any of these things can constitute an emergency. Although an emergency fund may exist as a lump sum, it needs to cover monthly expenses for a predetermined period, typically six months to a year.

While making a financial plan, make a provision for building up an emergency fund in stages, like, say, starting with a percentage of the monthly income. Then, you can gradually build it up until at least the minimum amount accumulates.

4. Prioritize Payments

This is an essential aspect of financial planning that you cannot miss. When the monthly income is received, you need to allocate it on a priority basis. The tendency is to spend money on shopping or eating out as soon as money enters the account.

However, the best approach is to channel the money required to be put into savings and investments and pay essential bills. There are a few options available to your client to ensure that money doesn’t get spent wastefully.

Once the monthly income comes into the account, you can:

Move it into an investment account with a priority on tax-deductible investments. Put it into a taxable account. Put it into a “jam jar” account.

A “jam jar” account is a separate, single account of the client that can be made difficult to access by, for example, not opting for internet access or a checkbook.

You can also make these payments automatic so that it goes out of the income account on a particular date and the account holder has to manage with the balance money for the rest of the month.

5. Update Your Client’s Investment Portfolio

Once you have a budget in place with a few checks and balances regarding spending habits, it’s time to ramp up the client’s portfolio. Your client will already have a portfolio—everyone does. But you need to make it more relevant.

There are many theories about how much one should save per month. Experts commonly agree that 20% to 35% of income should go into savings each month. The percentage varies with the age of a person.

Payments into savings should come under the heads of short-term and long-term. While short-term savings may go toward college fees or annual insurance premiums, long-term investments could be payments into retirement plans.

A portfolio should include investments ranging from low-risk to medium-risk and high-risk. The experienced financial advisor can build up a well-balanced portfolio with all the elements to grow wealth slowly but steadily. Also, ensure that the portfolio you create synchronizes with your tax planning objectives, particularly when handling capital gains.

6. Read the Fine Print

Paying attention to details should be your mantra as a financial advisor. Being meticulous and methodical are qualities that are paramount for astute financial planning. Reading the fine print of documents can save a lot of trouble later on.

For instance, what if a client wants to back out of a contract or property lease? In the case of contingency, what is their legal standing? How much will they be disadvantaged, if at all?

Giving every document your full attention, you can provide the best to your clients. You can apply that same attention span while attending a CPA review course, putting yourself on the right track to becoming CPA-certified.

7. Play It by Ear

Just as an experienced musician can play music to suit the surrounding ambiance, a competent financial advisor needs to adjust according to the existing set of circumstances. The course of action for one individual may not work as well for another.

You cannot predict the stock market, a successful marriage, or a business venture. Nothing but death and taxes are guaranteed. So, use your discretion to decide what strategy you need to adopt for each case.

You Hold the Key to Professional Financial Planning

If you want to be a successful financial advisor, you have to be good at financial planning. You also need to be up-to-date with tax laws to execute suitable tax planning for your clients. To be good at your job and come off as a professional, you need to follow the hacks mentioned here.

With more experience over time, you will realize that these hacks work, and you can earn a good reputation in financial planning by following them.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Bryan Kesler is a renowned CPA exam mentor and also the founder of CPA Tutor Boost. He aims to provide affordable tutoring solutions to smart accountants struggling to pass the CPA exam. Find his resources and connect with him at

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact us at