Have you ever dreamed of being the financial boss of your money? We can take some lessons from business on this issue. What do you think successful businesses have in common?
They know what they earn, spend, own and owe each year. They have a clear, strategic vision and set goals to fuel it. They increase their income and market value by continually reviewing and improving their products and services.
If you can never seem to get a grip on your own money management, there’s a lot you can learn and achieve by handling your personal finances like an organisation. Let’s take a look at a few things you can do to be the financial boss of your money and wealth management.
“We don’t have goals, we just work randomly and hope for the best” – Not the mission statement of any successful business ever.
Every great leader has a vision. They put goals in place for their business and devise a plan to reach them. You need to do the same with your household finances because without clear goals and a plan, your money situation won’t change.
Quick tips on setting money goals:
- Know your ‘Why’. Don’t set a goal (financial or otherwise) without a real understanding of why you want to achieve it. Knowing and believing in your why is crucial for success. It will help you push through the setbacks and problems that would otherwise derail you. With a strong vision and why guiding you, you’ll be unstoppable!
- Be specific and realistic. Figure out what you want to achieve (paying off your credit card) the dollar amount ($1,500) and the date you want to achieve it by.
- Write your goals down and review them weekly, if not daily. We’re more likely to achieve our goals when we actually put pen to paper and read them regularly.
- Set big money goals like paying off your mortgage or saving for retirement then set smaller goals to keep you on track. For example, what amount do you need to pay towards your home each month to be mortgage-free in 10 years?
If you need some inspiration to get started, here are 6 smart money goals that may resonate with you.
Organise your digital and paper systems
Business with well-organised systems are efficient and far more likely to be successful than those where chaos reigns. Stuffing paperwork in random drawers and not keeping proper records is no way to be across all the financial comings and goings of your household.
People with highly organised finances are able to keep tabs on seemingly complex jobs like tracking all income and expenses down to the last dollar. Without proper systems in place, a task like this is impossible.
If you hate spreadsheets, don’t go devising a complex money management system in Excel. You’re not likely to stick with it for very long if you want to punch the computer screen every time you open the file.
There are plenty of apps and budgeting software out there to simplify money management without needing to reinvent the wheel. There’s also nothing wrong with using a paper-based system if you prefer good old pen and paper or a mix of different systems. Maybe you love an envelope system for fun money but track everything else digitally.
With a little discipline and commitment, your financial systems will tick over like a well-oiled machine.
Review your progress – weekly, quarterly and yearly
Reviews are standard business practice. Bosses check in with their teams and the guys in finance department regularly to keep a pulse on how they are tracking against their goals.
This same principle should apply to your financial plans. It’s great that you’ve set your goals, but to reach them you need to revisit them at certain points. Reviews allow you to check in on how you’re performing and make any adjustments.
Maybe you’ve received a pay rise or your side hustle income has boomed, how will this extra income fit into your financial plan? Without a timely review, you might find that extra money just slips out in discretionary spending.
Reviews are also important to check in on your behaviours and adjust habits have become stumbling blocks to reaching your goals. Never underestimate the importance of your habits when it comes to being the financial boss of your household.
If you’re consistently exceeding your grocery spend each week, what spending changes do you need to make? $50 each week over the budget might not seem like much but it adds up.
Reviews help you quickly address these issues so your long-range goals aren’t compromised.
Invest in yourself (time and money)
“Learn to work harder on yourself than you do on your job. If you work hard on your job you can make a living, but if you work hard on yourself you’ll make a fortune.” Jim Rohn
Successful businesses invest some of their profits back into the organisation, whether it’s sending teams on specialised training, updating their brand image or upgrading software. The idea is, these investments will help grow the business income in time.
As the financial boss of your household, you need to invest in yourself too.
YOU are your greatest wealth generating tool. If you’re unhappy with your income and financial situation, don’t blame your job, the government or everyone else. Take action and work on becoming more valuable by sharpening your skills and learning new things.
This doesn’t have to mean dropping a few thousand dollars on a course when you really can’t afford it. It might mean spending time seeking out learning opportunities that don’t cost a lot of money. Reading books, taking affordable training courses and studying financial reports.
This is a path that will open up more wealth generating opportunities, whether it’s landing a better paying job, learning how to invest or starting a side hustle to create an additional income stream. Make growth part of your daily agenda.
How do you run your finances? Are they a complete mess or have you got some great business-like structures in place?