Real Smart – Finance How To Manage Your Finances Like A CEO?
At some point in most people’s life they have either worked for a corporation or owned a small business. If you have ever had this experience, you’ve most likely witnessed how the companies you have had associations with earned and kept their bottom line. Usually you will notice that companies that are successful at growing their business revenue strategically plan their goals ahead of time. Generally, goals for the next year are created the prior year and in some cases for extreme goals the planning starts years earlier. After proper planning, a team of financial specialist usually establish how these goals will be financed. This will include ways the company expects to make revenue, save revenue, and prevent loss. After the team has discovered where the money to finance the goals will come from, they will then create very specific budgets to ensure that goals are financed at their expected times. The last step is to divide the goals into quarterly goals and in some instances the goals may be divided into daily goals. Each quarter a measurement of production is accounted for and adjustments are made to ensure the company grows financially each year. This strategy not only works for corporations, but it is also a very effective way of managing your household finances.
Most companies have a CEO / CFO, or at least some sort of head figure of the company. When we relate this concept to a smaller entity such as a household, who would you suspect are the CEO / CFO of your home? I’m sure you had no problem guessing that right… yes YOU are! You are without a doubt the head Woman or Man in charge. Managing your finances like a CEO can be powerful and liberating if done appropriately. Together you, your significant other and in some cases maybe only you, are your financial team… but have no fear YOU ARE A BOSS!
Together, discover and write down your goals for your family prior to the year you would like to accomplish them. Remember, different goals will require longer or shorter lengths for planning to be successful so be realistic. Be sure to access where you are now and what steps you will need to take to make these goals a reality. Once your goals are written share them with the entire team, i.e. the team is your immediate family or those directly affected. Sharing your goals with the family is important because it encourages everyone to be on board and creates an environment of excitement when those goals are achieved.
Discuss effective ways to finance these goals. This step requires you to really evaluate the ins and outs of your finances. You must evaluate all income coming in and all expenses going out. From the purchase of property down to the purchase household toiletries. Discover holes in your financial wallet that prevent you from saving money and eliminate them fast. Some of the most noted wasteful expenses are groceries, personal products, and utilities, so be sure to monitor these potential money drainers properly. Explore new ways to generate money with either talents that you already have or possessions that you already own. Explore purchases that can be made to earn you additional income. Examples are property, machinery, vehicles, and etc.
Create budgets to effectively reach your goals. Budgets are specific and carefully followed to achieve optimum success. Like goals, budgets can be created for the year or as specific to each day. My recommendation would be that you follow monthly budgets that you review at least weekly to ensure that you maintain your monthly goal and this will propel you toward your quarterly goal. I also recommend that you create a quarterly budget that is also reviewed quarterly to ensure that you meet your annual goal.
Review, modify, and consistently measure your success. This may be the most important step of all. Constantly review and measure your progress towards your goals. If modification is needed adjust the process swiftly, adjust your focus back to the goal, and repeat.
As you can see, most times there is no need to adjust the wheel. Just as a company should grow each year financially so should your household. Likewise, to ensure growth and profitability, if a company notices that their bottom line was affected negatively towards the end of the fiscal year then changes to the budget should be made immediately to prevent financial catastrophe. Therefore, if you notice a negative bottom line in your household finances, to prevent bankruptcy and financial hardship changes to your budget should be made immediately. I am “Your Financial Best Friend” Takela Levett, and remember YOU ARE THE BOSS, so manage your household finances like a CEO!
Owner of E&L Financial Consulting Firm