Growing Wealth … It’s Not Just for Companies

Growing Wealth … It’s Not Just for Companies 
What We Can Take from the Office 

When you’ve been acting in some type of CFO capacity for as long as I have, you can’t help it—growth strategies, numbers, maximizing revenue, minimizing expenses, and leadership are a part of your DNA. And that DNA stays with you whether you are in the office, on a Zoom call, or taking care of your personal finances.  

I started thinking about the correlation between what we do in our “official” CFO role and what we do in our personal lives. I asked myself what we can learn about what we do in the office to take it home and help us build our own wealth. And the more I thought about it, the more I thought that many of the same principles apply whether we are strategizing for our companies or for our families.  

Unless you’re independently wealthy or have been left a huge inheritance, you have to build your own wealth, just like a company has to build its revenue. While inflation and growing debt may make it seem like this is futile, with the right principles, strategies, and habits in place, your financial growth will strengthen. So, I’ve compiled the top five habits to help you grow your wealth … from a CFO perspective. 

1. Don’t spend more than you earn 

This may seem intuitive, but for many individuals, it’s anything but. It’s critical to be aware of our spending habits and have discipline to live within our means. This does not mean depriving ourselves of full lives, as some may think. Rather, it comes down to making choices. 

A few tips to help along the way: 

• Take advantage of automated savings (i.e., pay yourself first). 
• Eliminate frivolous spending. 
• Create a budget and stick with it. 
• Stop comparing your spending with others (especially from social media posts).  

2. It’s never to early (or late) to invest and save

Far too many younger individuals just entering the workforce think they don’t have to worry about saving for retirement or investing. They figure they have years to think about all of that. But I would argue there is no time like the present. Investing is a great tool to help build wealth, but to truly do so takes years. So, the sooner we start, the better.  

Additionally, when we start younger and don’t yet have a family or other major expenses to account for, we can invest more and solidify some strong financial habits before incurring additional, often larger expenses. On the opposite side, others think it’s too late, so why bother. It is never too late. You may not have exactly what you had hoped for as you approach retirement, but at least you will have something. 

Financial planning should always include both short-term and long-term goals. This includes having an emergency fund, so when those inevitable life experiences come up, our savings accounts do not get exhausted. It also includes taking advantage of matching retirement plans, such as 401(k)s. 

3. Use debt strategically 

Many financial experts will say to avoid debt at all costs (pun intended). However, I urge my clients to first consider the type of debt they have and also the importance of having some debt. To start, in order to build credit, it must first be established by incurring debt. This does not mean you should max out credit cards and pay insanely high-interest rates (actually an example of the bad debt we want to avoid). But if you are responsible with the debt you have, and make payments in full on time, you will build credit. With regard to the type of debt, consider lower rates on mortgages, home equity loans, and federal student loans. This can help establish credit and free up cash to invest.  

4. Diversify income 

Just like a company needs more than one product or service to offer, we need more than one source of revenue to truly build wealth. Now, you may be thinking that you already work a full-time job or have a business to run, with no time for anything else. However, there are many passive income opportunities that can help generate additional revenue with little time and effort.  

When we diversify our income sources, we minimize the risks associated with losing our jobs or closing our businesses. Other benefits to having additional sources include:  

• saving more and investing, 
• paying off bad debt, or  
• taking a long overdue vacation. 

5. Remember knowledge is power

This is a leadership principle that pertains to any industry and organization, and it applies equally here. We must always make a commitment to continuous learning. While expanding financial knowledge can be overwhelming to some, continuously educating yourself is the key to becoming more financially stable—from new tax laws to interest rates to investment opportunities.  

Resources can be found almost anywhere—blogs, videos, podcasts, webinars, mentors, and coaches. How you do it is up to you. The important piece is to be prepared, ask questions, and learn something that will help you navigate the path to reaching your financial goals. 

Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.