Have You Accomplished Any Goals

Category: Finance.

You re probably concentrating so much time on your job, and dealing with, your family day- to- day stresses that your personal checkbook takes a back seat. You need to become your family s Chief Financial Officer.

More than once you have been shocked when you didn t have enough money to cover all the bills or an emergency cropped up. Here are my five rules for treating your personal finances like a business: 1) Be Your Own Board of Directors. In business, Boards of Directors write mission statements to keep the company on track with goals. To make good decisions, you must know what you re trying to achieve. At home, it s up to you to define your mission and make sure you re fulfilling it by writing down your goals. Does your car need new tires soon? Not just your financial goals either, but your" life" goals because, let s face it, most goals involve money.

How much will they cost? You get the idea? 2) Know Your Operating Costs. How much do you need to set aside each pay to save up for them? How much money flows into your household and how much do you spend every month on average? Chances are you don t know what it costs to keep your household running on a profitable basis. Businesses know this because they project their budgets based on historic spending patterns.

Ever make out a detailed budget only to find out at the end of the month that you broke it in the second week? This, will be an, I promise eye opener. Dump the budget and create a" cash flow statement" that records how much you actually spend each month broken into several categories. You will readily see where you are bleeding cash on nonessentials like eating out four times a week. 3) Know Your Net Worth. This is a balance sheet where you list everything that you own and its market value. Companies measure progress toward goals through balance sheets which list their assets and liabilities.

List your checking and savings accounts, vehicles, investments, your house, etc. minus everything you owe. Track your net worth quarterly to make sure you re moving toward your personal goals. Ask yourself- "If I had to sell everything today, how much cash could I raise? " That will give you an idea of what you are worth when you add any ready cash and investments you can sell. Without this step, you will see the impact of your money decisions probably when it s too late. 4) Forecast the Possible Results of Your Financial Decisions. When a business makes important decisions, they use a process called" scenario planning. " In plain English, they look at the possible financial impact of one choice compared to another. This is like fortune telling without the crystal ball.

You can use the same process to make smarter money decisions. Bad choices put you farther from your goals. For any choice, and then look, pick two options at what each answer would do to your cash flow and net worth. Good choices get you closer. Companies report their outcomes to their shareholders in their annual reports. It s really simple. 5) Give Your Family an Annual Report. You need to review your list of priorities with your shareholders, every year, your family members.

Congratulate them for helping to make your household profitable. Make them part of the solution. Have you accomplished any goals? Did you spend less than you earned? Have your spending patterns changed? Did you save as much as you planned?

If you treat your money like a valuable tool, give it the respect it deserves, money becomes a powerful determinant of your family s future and yours as Chief Financial Officer. If you followed these five steps, your household will be a successful company. Yours for financial success. Jim DeSantis

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