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Why Your Personal Finances Are Like Running a Business

Updated: Dec 8, 2023

There are striking similarities between managing a business and managing personal finances, even though people often resist the comparison. In both scenarios, it's easy to get caught up in the exciting elements of strategy—be it business plans or investment choices. However, the real work of increasing shareholder value or personal net worth unfolds in the more mundane world of execution.

In the business context, shareholder value may be a focal point in boardroom strategy sessions, but it's actually built through the day-to-day operations that bring those strategies to life. The process can seem monotonous, but effective execution over an extended period is crucial. This involves focusing on key metrics, encouraging individual contributions, prioritizing customer service, and practicing disciplined financial management.

When examining businesses that have been enduringly successful—such as Coca-Cola, Procter & Gamble, Amazon, Microsoft, and Apple—it's evident that execution tops their list of priorities. These companies share a near-obsessive focus on execution and on measuring what truly matters to deliver an optimal customer experience.

Similarly, personal wealth doesn't just expand through constant monitoring of investment accounts or incessant adjustments to portfolios. Financial security is founded on sound execution: living within your means, maximizing retirement savings, avoiding costly financial mistakes, and maintaining open communication with your spouse about financial matters. Consistency and a long-term focus are vital. The objective is to excel in these basic tasks consistently over decades, not merely to focus on them intermittently.

When observing an individual or family that has successfully accrued wealth, the process is strikingly similar to that of successful companies. While the specific tasks differ, the common thread is execution. For individuals, this involves measuring what matters and maintaining a long-term perspective—perhaps the most critical element. It's easy to get caught up in current events and make rash financial and investment decisions. What truly matters is focusing on factors you can control, recognizing that inflation will generally increase the value of assets over time, and living within your means.

So, while it might be enjoyable to review, research, and adjust your investment strategies or business plans, never underestimate the power of effective execution. Both in business and in personal finances, that's where real value is created. Have a plan, work the plan!

DISCLOSURE - All written content on this article is for information purposes only. We utilized ChatGPT and other sources for this article. Opinions expressed herein are solely those of Core Wealth Consultants. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. Core Wealth Consultants, LLC a Registered Investment Advisor in the States of Florida, Indiana and Michigan. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Diversification and asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment loss.

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