CFO Dad How to Lead Your Family to Financial Freedom and Security

Jonathan Baird CFP®

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Copyright © 2020 by Jonathan Baird

All rights reserved. No part of this book may be used or reproduced by

any means, graphic, electronic, or mechanical, including

photocopying, recording, taping, or by any information storage

retrieval system, without the written permission of the publisher except

in the case of brief quotations embodied in critical articles and reviews.

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Biography

Jonathan Baird practices as a wealth manager for Mustard Seed

Wealth Management. He is also chief financial officer of Peoples

Bank and author of CFO Dad: How to Lead Your Family to Financial

Freedom and Security. He lives in Magnolia, Arkansas, with his wife

Emily and five children, Addie, Piper, Haddon, Josiah and Judah. A

CERTIFIED FINANCIAL PLANNERTM professional armed with

years of experience being the personal CFO to scores of people, he

seeks to give you practical financial tips and strategies that can put

you on the path to financial freedom and security!

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Preface

I grew up in a small town in South Arkansas. In my early life, I

remember being struck by how people lived their lives, and I was

able to observe stark contrasts of how different people lived relative

to their means. After going to college at Southern Arkansas

University, I attended Southern Seminary in Louisville, Kentucky.

Upon returning to South Arkansas, I began working as a financial

advisor and in a small family owned bank. This bank was started by

my great-great grandfather along with a few other partners in 1910.

I had many influences in my life, but perhaps one of the strongest

influences I had in terms of how I view finances was my grandfather.

He was old enough to have been affected by the Great Depression

and lived his life as though the next Great Depression could be right

around the corner.

My desire for this book is to spark a desire within the reader to build

real wealth so that you can be a blessing to others. Each chapter will

stand alone as an argument for implementing a specific tactic of

saving, spending, investing, or planning, but the chapters will also

build upon themselves to create an overall plan. I want this book to

be accessible to the layperson, so I have tried to keep it simple. My

hope for the reader is that this will convince you that financial

security is attainable and doable for almost everyone. I want to whet

your appetite for some of these tactics in hopes that you will take the

initiative and start on your journey to financial freedom and security.

Some books delve into intricate details and blather on and on

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without end. If you asked some of these authors for the time, they

would teach you how to build a clock. I just want to tell you what

time it is. I have written CFO Dad: Leading Your Family to Financial

Freedom and Security to versions of myself at different stages of life and

financial situation. This is just as applicable if you are a CFO mom,

or a CFO husband, wife, man, or woman. The chief financial officer

of a company is the one who has primary responsibility for managing

the financial decisions of a company, managing risks, and financial

planning. I am calling you to see yourself as the CFO of your life and

to seek dominion over it and take financial responsibility for yourself

and your family

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CONTENTS

Foreword .......................................................................................... 1

Acknowledgements ........................................................................... 3

Chapter 1: Sleeping the Sleep of the Saved and Thankful:

Why Financial Planning Can Give You Peace of Mind ........... 5

Chapter 2: Risk—The Moral Justification for Profit:

Why Equity Investing Actually Builds Wealth ........................ 10

Chapter 3: How to Scratch a Poor Man’s Nose:

Budgeting and Other Tips ...................................................... 15

Chapter 4: Don’t Put All Your Eggs in One Basket,

But If You Do, Keep Your Eye on That Basket!:

Investment Principles for the Layman .................................... 22

Chapter 5: When Somebody Helps You Out of a Ditch,

Don’t Complain About How They Do It!:

How and Why to Take Advantage of Employer Plans ........... 35

Chapter 6: Running Nekked: Strategies for the

Self-Employed or Small Business Owner ................................ 39

Chapter 7: In the Catbird Seat:

The Many Magical Benefits of Health Savings Accounts ....... 44

Chapter 8: Giving it the Old College Try:

Why 529 Plans are a Great Education Savings Option .......... 48

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Chapter 9: Staring Out the “Winder” and

There Ain’t Nothin’ Out There:

How to Deal With Market Downswings ................................. 51

Chapter 10: Shooting the Moon:

Bitcoin and Crypto; Hodl, FUD, and FOMO........................ 55

Chapter 11: Pigs in the Mud: The Joy of Charitable Giving ......... 63

Chapter 12: Training Your Children to Be Adults:

Tips on Parenting Finances ..................................................... 69

Chapter 13: Keeping Your Best Interest in Mind:

How to Choose a Financial Advisor ....................................... 74

Appendix: Financial Resources and Tips ...................................... 79

Glossary .......................................................................................... 84

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Foreword

or most of my adult life, I have been fascinated by how people

spend money. How do they decide how much to save for

retirement? How much to spend on housing or entertainment or

whatever? Why do so many pro football players end up in

bankruptcy when they know on the front end that their career will

likely be incredibly short? Or how does the worker who punches a

clock each day for 35 years end up with a sizable nest egg and a

comfortable retirement?

These kinds of questions roll around in my head constantly. And for

roughly 25 years as an educator, I did my best to get students

interested in those questions as well. As you will discover in the

following pages, Jonathan Baird is one student who shares similar

interests! Jonathan grew up in a small southern community and was

exposed early on to the extremes of poverty and wealth. As a

financial advisor and a banker, he knows what having money can do

(and also cannot do) for a person or a family. In this book, Jonathan

gives you a basic, common sense plan for mapping out a secure

retirement and a comfortable and pleasant life.

Jonathan is a “for real” type of person who practices what he

preaches. He knows how to shop for a bargain. He can explain the

basics of investing in simple terms that anybody can understand, and

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he uses these principles himself. When he talks about charitable

giving, it’s not just talk. It’s a way of life for him and his family.

Much of Jonathan’s personality no doubt comes from being

mentored by his granddad, whom you will meet in the following

pages. Just consider that an added bonus to an enjoyable read. Most

of us don’t have a degree in investing or extensive experience in the

financial services industry. But all of us do want financial security for

our family. Here’s your opportunity to get that knowledge in a nice

common sense, readable format. May you profit immensely!

--Dr. J. David Ashby, CPA, CFPⓇ

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Acknowledgements

am a blessed man with a wonderful family, great community of

friends, and colleagues that challenge and encourage me. I

wouldn’t be able to do what I do without my wife of 20 years who

homeschools our five children (Addie, Piper, Haddon, Josiah and

Judah) and is an inspiration to me. Emily is the greatest earthly gift

to me. As far as mentors who have influenced my career, my college

professor who got me interested in financial planning and hired a

young 25-year-old and taught him how to do financial planning at a

fledgling investment advisory firm, which has now grown to be the

largest independent advisory firm in South Arkansas. Dr. J. David

Ashby DBA, CPA, CFP® has been a mentor, friend, and business

partner and has contributed significantly to the writing of this book.

I want to dedicate the writing of this book to my grandfather, Harold

Fincher, who had a huge influence on me. In this book, you will find

many quotes that he would recite when appropriate and sometimes

when they weren’t appropriate!

I am thankful for my parents for providing many opportunities to

me, my brother for his friendship and unfailing support, my

grandmother, aunts and uncles, and my colleagues at Peoples Bank

and Mustard Seed Wealth Management. I would be remiss if I did

not acknowledge my client base, who makes all of this possible. I also

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have a strong group of friends who care for me, tell me the truth, and

make me a better person. I specifically want to thank my uncle, Dr.

Clark Fincher, and Brian Powell for giving me helpful input on my

original draft of this work. I stand on the shoulders of giants. Above

all, I want this book to honor my Lord and Savior Jesus Christ, who

saved a wretch like me. I sincerely hope that this book will be an

encouragement to you in your journey to have financial peace and

security.

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C H A P T E R 1

Sleeping the Sleep of the Saved and Thankful: Why Financial Planning

Can Give You Peace of Mind

n the lead up to the second world war, Winston Churchill, upon

hearing of America joining the Allied Powers against the Axis

Powers, was relieved that they had joined Britain to stand against

them and that night he “...went to bed and slept the sleep of the saved

and thankful.”1 Planning for the future is important because it can

give you peace of mind. If you fail to plan, it is planning to fail, and

there are very few things as practical and impactful to your present

and especially your future well-being as financial matters. So many

Americans put off important matters and indulge in consumerism,

immediate gratification, and short-term pleasure instead of creating

a long-term view of wealth and a plan to build it. Many people blame

others, blame the government, blame their job, or blame anybody

else they can to explain why they don’t have their financial situation

under control. If you live in America and don’t have some kind of

1 Winston S. Churchill. The Second World War, vol. 3. London: Cassell, 1948-1954. Lessing J. Rosenwald Collection, Rare Book and Special Collections Division, Library of Congress (142.1)

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debilitating disease or some other situation that makes planning and

saving impossible, you can take control of your financial situation

and create a future for yourself and a plan that can provide a great

life for yourself, your family and the world around you. There is so

much opportunity if you will just take advantage of it and implement

some simple rules and strategies to prepare for the future.

What a Time to Be Alive!

In America, we have the blessing of one of the highest standards of

living in the world. The metrics of our wealth and prosperity have

never been higher. Most people, if they have really thought about it,

would be much better off as someone who lives a normal middle class

life today rather than being a medieval king or even a “Robber

Baron” in the early 20th century. With the advent of the

technological revolution and significant medical advances, not to

mention indoor plumbing and air conditioning, we live better than

the richest people in the world a century and a half ago. Despite the

unprecedented wealth, opportunity, and technology we have, we still

find a way to become envious of others who have more than we do.

To quote that great philosopher Louis C.K., speaking to his

daughter, he said, “The only time you look in your neighbor's bowl

is to make sure that they have enough. You don't look in your

neighbor's bowl to see if you have as much as them.” As flawed as

Louis C.K. is, he definitely got that right and has given our society a

prophetic word.

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Not to get too political, but hopefully we can agree that envy should

not be the driving force of our national dialogue. While there are

examples of people who are disadvantaged and need a hand up, we

should be wary of giving too many handouts. America is built on the

crazy idea that individuals matter, that individuals have a right to the

product of their labor, and that we should personally benefit from

our hard work. The natural state of man for centuries has been that

of abject poverty and misery but only in the last few decades has the

tide on extreme poverty been turned. In my lifetime, the extreme

poverty rate among the world’s inhabitants has dropped from 44%

living on less than $1.90 per day in 1980 to 9.6% in 20152. Keep in

mind that the population of the world has been rapidly expanding

over this same period, and the data is five years old at the time of this

writing.

The Future is Incredibly Bright

I’m an optimist, I confess. The trajectory we are on is unprecedented

in terms of solving poverty. Third world countries are coming into

the first world. The growth of global wealth and extending life

expectancy is increasing like never before. Pretty much by any

physical metric you measure, we are much better off than ever

before. There is a glut of people who are learning to create wealth

and beginning to save money, and they are looking for places to

2https://ourworldindata.org/grapher/declining-global-poverty-share-1820-2015?time=1820..2015

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invest. Everyone in the rest of the world wants to have our Western

standard of living, and the reason we have gotten to this point is

because of our free market system. As more and more countries

liberalize their trade policies and open up their financial borders to

other countries, more people plug into the financial network. These

new additions’ potential is being unlocked at a rate that is

unprecedented. We will have everyone in the world all connected

together on the internet within a decade or two. The market has had

an incredible 10 years with 2010-2019 being an amazing decade for

stock returns. While a recession or depression is always a possibility,

there are a lot of reasons that the market could continue to grow at

a fast pace for a long time. I have no idea what the market will do in

the short run, but I am hopeful that our growth potential is still as

strong as ever. As I write this, the fallout of the Covid-19 pandemic

could dramatically change the course for markets in the coming

years.

You Can Do This!

I know what you are thinking, “I thought this was supposed to be a

book about financial planning! Why are you preaching to me?” Well,

I suppose my seminary training is shining through a bit, but I really

want to convince you that financial security and financial freedom

are possible in your life. Never before has financial prosperity and

security been more possible and available to more people. In this

short book, I want to empower you to take control of your financial

future and give you some concrete steps to put yourself and your

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family on the path to financial security. Many books have been

written on these subjects, but I don’t know of one that seeks to be a

simple introduction to financial planning that is accessible and

applicable to almost everyone. My sincere hope for my readers is that

you are successful and are able to, like Churchill, sleep thankful.

While all of these strategies and tactics aren’t possible or even needed

for everyone, most of what is written will be applicable to most

people at some point in their lives. In order to make full use of these

strategies, you will at some point probably need to consult a

professional advisor, accountant, lawyer, or insurance professional to

help you implement some of them. Don’t worry. I’ll teach you how

to do that as well! But the first thing I want to convince you of is that

you can be successful. You can build real wealth. You can change your

family’s financial trajectory and create a brighter future for yourself,

your children, and future generations.

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C H A P T E R 2

Risk—The Moral Justification for Profit: Why Equity Investing Actually

Builds Wealth

s a financial advisor, I often hear objections to investing in the

stock market. I certainly understand aversion to risk, but

oftentimes people pay attention to some risks to the exclusion of

others. In the instance of equity (stock market) investment, many

people pay attention to the volatility (up and down movement) of

prices. We have a general tendency of feeling bad when things don’t

go our way and feeling exuberant when they do. So when stocks go

down, we regret buying, and when stocks go up, we think we are

geniuses! Many people who have these concerns have more

experience with fixed income. These people are more concerned

about the return OF their principal than the return ON their

principal. The problem with taking this position to the exclusion of

all equity investment is that it overlooks another very real and

impactful risk. Purchasing power risk (inflation) is the risk that your

dollars tomorrow won’t buy as much as your dollars today. It

happens so slowly that we don’t notice it. Another factor that mutes

the impact of inflation is the increases that we see in technology. As

A