Would taking a business-like approach to your personal finances put you in a better place? If you were to implement more systems and processes, would you better position yourself for success? I think yes.
The more we can manage our financial lives like businesses, the better off we are. I’m going to share six ideas you can take and immediately implement into your life.
For the last 20+ years as a financial advisor, I’ve helped countless people use these principles. I’m honored to be named to Investopedia’s list of the top 100 financial advisors many years running.
Here’s what we’ll cover:
Let’s get started.
Being a professional
When you hear “professional” what comes to mind? I’m going to share four ideas that I believe make someone a professional.
Becoming a lifelong learner
Professionals are curious and always looking for ways to improve. Personal finance is a massive area and there’s no shortage of things to learn. Embracing your inner student will help you better manage your finances.
Doing what’s required
A true professional doesn’t shy away from additional work. They don’t say, “that’s not in my job description.” Instead, they go above and beyond, and do what’s required to complete the task. Since we’re talking about your money, and your financial future, it’s wise to adopt this attitude.
Following through
Professionals do what they say they’re going to do. They follow through on things. You may be the head of your household, and the only person managing the finances. Or there may be several people handling the required tasks. Whatever your situation, it will benefit you to do the things you say you’re going to do in a timely manner.
Doing versus feeling
A professional goes about their business regardless of whether they feel like it. You may never feel like reviewing your budget or preparing your taxes; but they need to get done. Putting your head down and getting the job done is a mark of a professional.
The more professional and business-like we can be, the better positioned we’ll be to achieve our financial goals and objectives.
Getting organized
When something is a problem, make it a process- then it won’t be a problem anymore.
Getting organized means creating processes for everything that needs to get done. This is true for how you manage your cash flow and budget, how you save and invest money, and how you work with any vendors or partners you work with.
Scheduling and technology
What gets calendared, gets done. I encourage you to schedule all of your important financial meetings. You need to have consistent meetings where you review your cash flow, budget, investments, and planning.
There are so many tools that can make managing our finances easier. What apps or software are you taking advantage of? Where are the gaps that technology may fill?
Look for opportunities to create systems and processes with your finances. The more you can automate activities like bill pay and contributions, the better.
Creating sustainability
It’s all got to fit into your life. I just talked about systems and processes, and those are really important. But if you don’t use them, then they’re not effective.
The best tool for you is the one that works. If you like to use the back of your checkbook to balance your accounts and it’s working, keep doing it. Just because there are fancy tech-enabled tools available doesn’t mean they’re right for you.
The best plan and approach for you and your family is the one that you’ll stick to. For this reason, it’s important to review everything you’re doing to make sure it’s doing what it’s supposed to be doing. When you find something that’s not, get rid of it and find something that works.
Planning for the future
Businesses are constantly planning. They look at quarterly results, determine any adjustments to be made, and talk about what needs to happen in the months ahead.
When you’re planning for your financial future, time horizon must be an integral component. That being said, it can be simple. You need money today, 10 years from now, and 20 years from now.
Short-term
Your short-term time horizon is today to three years from now. Think about what your most important priorities are over this time period and plan accordingly.
Mid-term
Your mid-term time horizon is three to 10 years from now. Common priorities are down payments for homes and funding education.
Long-term
Your long-term time horizon is 10+ years. The biggest priority here is saving for retirement.
While we’re talking about personal finances, it’s important to take an integrated approach to setting goals. In service of helping you do that, you can access our Goals course for free. It asks you to consider the six key areas of your life and what you want to accomplish.
Involving stakeholders
Establishing open lines of communication with all your stakeholders is essential. For personal finance, stakeholders can be loved ones, community members, and any professional advisors or partners.
You’ll determine which aspects of your finances you’re comfortable sharing with your family. I’ve found the more open we can discuss money, the better off family dynamics become.
In terms of working with professional advisors such as CPAs, Financial Advisors, and insurance professionals, it’s smart to establish expectations for communication up front. It’s up to you to determine how frequently you want to be in touch with them. At a minimum, you need to check in with your professional advisors at least once a year.
Taking ownership
Finally, you need to take ownership of your personal finances. There will never be anyone more interested in your financial success than you are.
When you find areas you’re simply not interested in handling, you need to outsource the work to ensure its completion. For the areas that you accept responsibility for, you need to make sure you’re staying on top of them.
With great responsibility comes great power. As you take more ownership, you’ll grow more confident. As you grow more confident, you’ll take great interest. All of it will lead to positive habits, which will create virtuous cycles. Nobody knows what the future holds, and we don’t control what life will throw at us next. All we can do is position ourselves for success, and let the chips fall where they may.
Taking a business-like approach to our personal finances is a big step in the right direction.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
We’ve got three free courses as well: Our Goals Course, Values Course, and our Get Out of Debt course.
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