The Most Important Thing in Finance – The Money You Earn

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FINANCIAL RECKONINGS

By Clark Troy
Contributor

Financially speaking, the first half of 2022 was not fun in almost any way. Inflation made everything more expensive while pretty much all major asset classes declined: stocks, bonds, real estate investment trusts, they’ve all gone down together in an exceedingly rare fashion. As interest rates have risen, house prices have softened. Commodities as a group have also been volatile. Gold, traditionally thought of as a portfolio stabilizer, has fallen, if modestly, while copper, viewed by many as an economic bellwether, has crashed worse than everything except cryptocurrencies. Grain prices spiked during the initial stages of the war in Ukraine as fears of global hunger took hold but have come back to earth. Oil and gas alone have been the only good place to invest and even they have come down in recent months, much to the relief of consumers.

For those who have been watching it all too closely, even for those who possess substantial assets, it has been rather dispiriting. But for most working people it really doesn’t matter that much because their assets are far from the most important things in their financial lives. That honor belongs to good old earned income. Show me someone who’s anxious about the markets, and I’ll show you someone who’s nervous about their career and their ability to earn money. Or someone who spends too much money and has too much debt.

People who are confident in their professions and who have a handle on their expenses don’t get nervous when markets get gloomy. They just adjust, hunker down and push on.

Of course, when the markets get really bad, companies cut costs, and since labor is the largest expense for many if not most companies, people lose their jobs. Which is why we need to always be protecting ourselves beforehand by anticipating that we might lose our jobs.

How does we protect ourselves? First off, people should maintain a continual focus on expanding their skill sets and deepening domain knowledge. This always involves decisions. Should we go broad, trying to do new things, or deep, doing the things within our job description better and faster? This is often a tough decision. If you always go broad, you risk turning into a generalist with no core expertise who is expendable. If you always go deep, you can get pigeonholed and siloed so that you’re passed over for opportunities. You’ve got to decide what’s right for you based on how you feel about your job, your organization, your boss, etc., at a given moment. But doing nothing to improve yourself for extended periods of time bodes ill.

Then there’s networking, a term that has exploded in popularity to such an extent that some consider it a dirty word. Which is just silly. It’s not that you should always be job hunting, but there’s no harm in keeping your eyes and ears open to organizations (or other business units within your company) that might interest you – and to which you might appeal. Read articles about competitors and organizations of interest in local and trade publications. Talk to people about their jobs at conferences, at parties, on the sidelines of your kids’ athletic events, wherever. Go to the occasional event after work. Offer to do favors and then follow up. Connect on LinkedIn or via email. Meet for lunch or coffee. Lather, rinse, repeat. Not only will you be building pathways that may help you with a next role, but you’ll also learn things that will help you in your current job.

I’m sure there are plenty of other things one can do to enhance one’s earnings prospects. I am not a career counselor by training. What I can say with confidence is that in times of uncertainty, the most impactful thing for yourself financially is work on yourself, not noodle with your 401k or IRA as if it’s going to change something. It is about as glamorous as it sounds, but something remarkable happens when you take steps to improve and protect yourself and your prospects. You feel better and more secure. As you work to improve yourself and have conversations with people – some more fruitful than other, to be sure –  you learn about your field and yourself. New pathways in your brain often open and you can breathe more freely.

Eventually, something happens. Some new job opportunity or responsibility will present itself if you really want it to and look hard enough for it. Or you’ll have laid the groundwork for it to be easier to look in the future.

To be clear, there’s no guarantee that you will outrun the grim reaper of career disruption in the form of a layoff. Most people go through rough patches in their careers, I know I have. But those who have been anticipating their possibility and protecting themselves against them by staying limber with their skills and maintaining the exoskeleton of a professional network fare much better and lose less sleep when challenging times come. Unless, of course, they’ve been spending too much money or have too much debt and don’t have adequate emergency savings. But those are topics for another day.


Clark Troy is a financial planner at Red Reef Advisors, LLC, in Durham.

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