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  • Writer's pictureMalissa Marshall, CFP®, MS Tax, EA

Financial Planning for Busy Executives

Updated: Aug 24, 2023

As a business executive, you have a lot on your plate. You likely juggle multiple responsibilities at once and work long hours day in and day out. While your career is demanding, it’s also very fulfilling. Without your leadership, a company’s growth and success wouldn’t be possible.

Even though it’s easier said than done, it’s essential you don’t forget about personal matters like financial planning. By keeping your finances top of mind, you can ensure that you and your family reap the rewards of your hard work for years to come.

Challenges of Financial Planning for Business Executives

You know the ins and outs of your company. After all, you are recognized as a leader within your organization. However, that doesn’t mean you have extensive experience with financial planning, especially on a personal level. If you’re new to it, you may be unsure where to start and longing for guidance.

That’s where financial advisors come in, although it's important to connect with a financial advisor who specializes in helping business executives with the particular financial planning challenges you may come across as a leader at a mid to large-sized firm.

If you read this guide and decide to hire a financial advisor with experience helping business executives like you, you can put yourself and your family on the path toward financial security. You may also avoid the common money mistakes that many people in leadership positions at large organizations have a tendency to make.

Financial Planning for Business Executives

There are a number of topics to consider as well as questions you’ll have when you’re planning your finances as a business executive. Here’s a brief overview of several of them.

Living Well on a Business Executive Income

Your experience level, the company you work for, and the industry you’re in all play a role in how much you earn. Chances are however, you’re rewarded with a high salary that continues to go up every year. According to the Bureau of Labor Statistics, executives in 2021 earned an average of $98,980.

While your income as a business executive may make it possible for you and your family to live a very comfortable lifestyle, you still need to pay attention to how you spend and save your money. After all, a high income doesn’t guarantee financial success and stability.

Here are a few questions a financial advisor can help you answer so you can make the most of your income as a corporate leader.

● How much can I afford to spend on my everyday expenses and luxuries each month?

● Can I afford to maintain my current lifestyle and still meet my financial goals?

● What financial planning insights have you gained working with other business executives like me?

Making the Most of Your Business Executive Benefits

As a business executive, you’re likely a candidate for a number of benefits in addition to a sizable salary. You may be eligible for a company-sponsored retirement plan with a matching contribution from your employer, a supplemental retirement plan exclusively for executives, paid time off, insurance, and even stock options.

Your company may also take care of you through other valuable perks like a company vehicle and cell phone plan, an expense account, tuition reimbursement, and training opportunities. With so many benefits at your disposal, you may struggle to take full advantage of them. A financial advisor can help you navigate your benefits plan and answer questions like:

● When and how should I exercise my stock options?

● How much of my income should I invest in each of the retirement and savings plans available through my employer to maximize my benefits?

● Are there special tax considerations I should know about if I buy or sell shares of my company stock?

Buying a House as a Business Executive

If you’d like to buy a house, you’re in luck. Since you probably have a history of W2s or pay stubs to prove your ability to repay a home loan, getting approved for a mortgage shouldn’t be an issue. While you may opt for a government-backed mortgage with a low down payment requirement, you’re likely better off with a conventional loan and 20% down payment so you can avoid private mortgage insurance (PMI).

A financial advisor can help you decide on the ideal mortgage situation and determine a budget for your new home. They may save you from overspending and becoming “house poor” as this is widely seen with many business executives. Just because you get approved for a sizable home loan amount doesn’t mean you can comfortably afford it and meet your other financial goals.

Saving for Retirement as a Business Executive

The more you earn as a corporate executive, the more you’ll need to save to be able to maintain your lifestyle throughout your retirement years. While you’re in your peak earning years, you’ll want to build up a substantial nest egg for your future.

In addition to funding your 401(k) or another employer-sponsored retirement plan, you need to figure out how to make the most of your stock options. You generally don’t want to end up in a situation where you have a disproportionate amount of your net worth tied to the stock of the company you work for. Diversification is essential and a financial advisor can help.

With a financial advisor’s insights, you can receive answers to important retirement questions such as:

● How much do I need to save to meet my preferred retirement lifestyle?

● Where should I keep my retirement savings?

● What is my long-term investment strategy?

● How do I reduce exposure to company stock?

Expenses and Deductions: Keep More of Your Income

You’ll be able to take the standard deduction or itemize your expenses when you file your taxes. If you work with a financial advisor, they can help you address questions such as:

● Does it make sense to take the standard deduction or itemize?

● Which deductions am I eligible for?

Your Insurance Needs as a Business Executive

In addition to health insurance that your company will likely provide to you and your family, you may need life insurance. Since you likely earn a high income, you’ll probably require a larger death benefit than what your employer-sponsored life insurance policy offers.

With the right life insurance policy, you can protect your loved ones and allow them to maintain the same lifestyle in the event you pass away. A financial advisor can help you weigh the pros and cons of the various life insurance options available to you.

Financial Planning is a Necessity

Not everyone has what it takes to succeed as a business executive. In fact, many people lack the work ethic, ambition, and drive required to land and keep a high-level position.

To make the most of all you’ve accomplished in your career, a financial plan is a necessity, rather than simply an option. A financial planner can guide you through the financial planning process so you can lead a fulfilling life and future.

Enjoy a Secure Financial Future

With a solid financial plan in place, you can ensure your money works for you and your family. You’ll be able to live the life of your dreams outside of the workplace and avoid many of the financial obstacles that business executives are known to experience.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. Before making major financial decisions, please speak with us or another qualified professional for guidance. The original version of this article first appeared on Wealthtender written by Brian Thorp.


Image by bady abbas

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