Run your family finances like a business

Run your family finances like a business

Question: I want to prioritize my family’s financial habits and start making smarter choices. Do you have any tips or strategies for family finances?

ONE: The best advice we can give you is to start running your individual and family finances in the same way as a business. Most people do not consider themselves “businesses” – trying to make a profit. Looking at your financial situation from this perspective can be helpful in determining where you can cut expenses, increase cash flow and generally improve your personal financial situation. This can be especially beneficial if you anticipate a greater financial commitment in your future, such as buying a home or starting an actual business. Here are some tips.

Tom Cooney with wealth dimensions

Examine your financesWhere a director can search for accounts to get an overview of the company’s status, you can create or update a personal net worth statement. Essentially a monetary scorecard, a net worth statement showing where you stand financially and whether you are on track to reach your short-term and long-term goals.

You can calculate your net worth by summarizing the present value of all your assets, including cash and cash equivalents, brokerage accounts, pension funds, real estate and other fixed assets and personal assets. Then deduct your liabilities, including mortgages, personal loans, credit card balances and taxes due. The difference between the total value of your assets and your liabilities is your net worth.

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