When you meet with a financial planner for the first time, you'll have a conversation about your money habits, challenges, and goals. They'll also want to see the numbers: your bank and debt balances, a list of other non-bank account assets, and any insurance policies you have.
From there, you can step back while they do much of the heavy lifting. The ultimate task for most any financial planner is developing a system to optimize your money so you can meet your needs and get closer to buying a house, building a nest egg, taking that once-in-a-lifetime vacation, or whatever is important to you.
Of course, you'll have to put in some effort too, especially if their recommendations involve shifting your spending or your savings. But generally there are a handful of time-consuming and complicated tasks a financial planner can handle so you don't have to.
1. Create a budget
If you find yourself living paycheck to paycheck because of sheer mismanagement, a financial planner can create a budget that accounts for all your expenses while keeping in mind your goals for the future, whether it's buying a house or investing more. You'll first have to provide them with a breakdown of your monthly spending, including how much you pay for housing, food, debt payments, and everything else.
Remember: A financial planner's calculations are only as accurate as the information you give them. They're not there to judge your spending habits, but to make thoughtful adjustments, so make sure you're honest about how much you spend on Ubers and Postmates every month.
2. Identify ways to save on taxes
Most people avoid poring over their taxes at all costs. A financial planner knows exactly what to look for to help you save money and can even connect you with a CPA for deeper insight and strategies.
Whether you're a business owner, a single parent, a freelancer, newly married, or someone who has an unusually complicated tax situation, there's probably an opportunity to minimize your tax liability that's hiding in plain sight.
3. Manage your investments
If investing makes you anxious or stressed, leave it to a pro. Financial planners who are licensed to manage investments will commonly a charge an asset under management (AUM) fee — often in lieu an hourly or flat fee — equal to 1% to 2% of your portfolio. It's a small price to pay if the alternative is not investing at all. In addition to providing general financial planning advice, they'll take control of your investment accounts so you don't have to concern yourself with returns and rebalancing.
4. Calculate exactly how much you need to save to meet your goals
Once you share your goals with your financial planner, they can calculate exactly how much you need to save to get there. If you're planning to put your kid through four years of college, for example, a financial planner can run the numbers to determine how much you need to save every month, and where to invest it, so that you'll have enough by the time the first tuition payment is due.
You can also enlist a financial planner to see if you're on track to meeting your goals, like retiring at 65, with your current savings rate and investments.
5. Review your insurance coverage
Technology has come a long way and it's easy to get life insurance, disability insurance, renters insurance, and car insurance with less than an hour of research online. Even if you think you're covered from all angles, a financial planner will review your policies in the context of your larger financial picture to make sure your coverage is adequate and aligns with your future goals and current expenses.
6. Hold you accountable
A good financial planner won't just draw up a plan for your money and leave you to it — they want to help you succeed. Whether you agree to meet monthly, quarterly, annually, or on a rolling basis, your financial planner is the ultimate accountability partner for your money.
To be sure, you won't get very far without your own continued efforts, but we could all use a cheerleader — or a nudge when we start to drift off course.