Seven financial planning tips only pros know


The world of finance is like an endless labyrinth for the layman. These people turn to a financial advisor for help with financial matters, especially with financial and tax planning. Individuals and organizations should avail the services of financial advisers to do the right thing with their money.

You don’t have to be a Chartered Public Accountant (CPA) to provide financial advice, but if you are, it improves your credibility. If you haven’t already, you can enroll in a CPA review course and qualify.

As a financial advisor, you have a crucial role to play in providing financial advice to your clients. It is a great responsibility to offer advice on how to use money that is not your own. Knowing a few useful tips in financial planning can be helpful.

Pro Financial Planning Hacks You Can Use

First, you need to realize that what works in one set of circumstances may not work in another. Therefore, you should use discretion when applying the hacks presented in this article.

1. Separate bad debt from good debt

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

The customer should not abuse credit cards or manage credit accounts by borrowing indiscriminately. They should neither spend money they have nor spend more than they earn.

Bad debts like bad credit cards will also generate a bad credit score. Good debts like mortgages and car loans, however, are acceptable as long as they are properly monitored. They are also used to improve the credit rating.

2. Make a budget

A client may find this step boring, but it is an integral part of good financial planning. Any individual or organization should create a budget defining the allocation of funds available each month.

You can rectify the mistakes of the past today to ensure a better financial future tomorrow with the help of a budget. You can only get financial control if you have all the relevant information to deal with it constructively.

Gather all invoices, bank statements, payslips, payment vouchers / details (in the case of self-employed workers) and other such information. You will need to list the monthly expenses and put them under the heading of fixed and variable costs.

Once you’ve listed the monthly expenses, you can identify where you can cut costs to put money aside for savings and investment. But we’ll cover this aspect later 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 won’t cover all eventualities, and for specific scenarios you must have an emergency fund in place.

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

When developing a financial plan, plan to build an emergency fund in stages, for example, starting with a percentage of monthly income. Then you can build it up gradually until at least the minimum amount accumulates.

4. Prioritize payments

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

However, the best approach is to funnel the money needed for savings and investment and to pay the essential bills. There are a few options for your client to ensure that the money is not wasted.

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

Transfer it to an investment account with priority on tax-deductible investments. Put it in a taxable account. Put it in a “jam jar” account.

A “jar of jam” account is a separate and unique customer account that may be difficult to access, for example, by not opting for Internet access or a checkbook.

You can also make these payments automatic so that they come out of the income account on a certain date and the account holder has to manage the money balance 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 on spending habits, it’s time to increase the client’s wallet. Your client will already have a wallet – everyone has one. But you have to make it more relevant.

There are many theories about what you should save per month. Experts generally agree that 20% to 35% of income should be spent on savings each month. The percentage varies with a person’s age.

Savings payments should be classified into short term and long term categories. While short-term savings can be used towards tuition fees or annual insurance premiums, long-term investments can be payments into retirement plans.

A portfolio should include investments ranging from low to medium to high risk. The experienced financial advisor can build a well-balanced portfolio with all of the elements needed to grow wealth slowly but steadily. Also, make sure that the portfolio you create syncs with your tax planning goals, especially when dealing with capital gains.

6. Read the fine print

Paying attention to detail should be your mantra as a financial advisor. Being meticulous and methodical are essential qualities for sound financial planning. Reading the fine print of documents can save you a lot of trouble down the road.

For example, what if a client wants to opt out of a real estate contract or lease? In case of contingency, what is their legal value? How disadvantaged will they be, if at all?

By giving your full attention to every document, you can deliver the best to your customers. You can apply the same attention span while attending a CPA review course, setting yourself on the right path to becoming CPA certified.

7. Play by ear

Just as an experienced musician can play music depending on the surrounding mood, a knowledgeable financial advisor must adapt to all of the existing circumstances. The course of action for one individual may not work as well for another.

You can’t predict the stock market, a successful marriage, or a business venture. Nothing but death and taxes are guaranteed. So use your discretion to decide which strategy to adopt in each case.

You hold the key to professional financial planning

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

With more experience over time, you will find 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 Office of National Affairs, Inc. or its owners.

Author Info

Bryan Kesler is a well-known CPA mentor and also the founder of CPA Tutor Boost. It aims to provide affordable tutoring solutions for smart accountants who struggle to pass the CPA exam. Find his resources and connect with him on

Bloomberg Tax Insights articles are written by seasoned practitioners, academics, and policy experts who discuss current tax developments and issues. To contribute, please contact us at [email protected].


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