How to Run your Finances like a Business

As a financial planner I speak to a lot of people about their finances. And do you know what I’ve observed?

I’ve found there is a tendency for us to see our current employment as the highest priority in our financial affairs. For the most part this is the right viewpoint, after all it is what we do for our employment that earns the money that enables us to survive and do all the things we want to do in life, isn’t it?

However when you look at it a bit more closely, there is some planning we need to do. But we are often so busy working that we don’t take the time to look up from our desks and take in the view of what lies ahead.

When we do, we see that the average retiree will live 22 years beyond their 65th birthday, (and possibly even longer by the time the increase in preservatives we have eaten take hold!:)) This extra longevity means it is essential that we set up an income stream which can support the lifestyle we want beyond this game we play of exchanging our time for money. (Which is what work basically is!)

The resolution of this issue is a fairly easy one to explain but a little more difficult to implement. However if we were to look at our overall and future financial position like a business person looks at their business we might start to get on top of things. Essentially if we can learn to have a little less now in order to have a lot more later and do it with a disciplined focus, a lot of our dreams won’t seem so unreal.

One of the common traits I’ve noticed about people who do succeed in life, is that they treat their personal finances as a business – their family retirement business.

    Treating your personal money as a business can lead to a number of positive outcomes:

  1. The ability to make work optional earlier than you might have originally planned;
  2. Having the choice of lifestyle that you want to have;
  3. More confidence that you actually are on the road to wealth.

    Now you may already be doing this and if you are, then you are more likely to be on track than most people. (But I do happen to know that only 3% of people do this!) So to see how far OFF track you may be, ask yourself the following questions:

  1. Do I run my family finances as if I were running a business? – As in, do I hold regular meetings to check my progress, do I have a formal plan for expense management and do I have strategies to increase my income, etc.
  2. Do I have a formal plan for the management of my wealth? – Things such as a written statement of my financial goals that contains policies, a clear system for accrual and investment of funds and a team of professionals to assist me if I need them for taxation, finance, financial planning, investment and legal issues.
  3. Am I satisfied that I will meet my financial objectives? – As in, how will my family retirement business do this year or how will it do in future years.
  4. Do I make the time to look at what the future holds, where my potential is leading me and how I am tracking?
  5. Do I hold regular meetings to review my financial position, even with my partner or spouse or any other adviser?

If you found yourself saying something along the lines of “I really should be doing that…!” then congratulations. You are at least self-aware enough to recognise the problem. And that’s the first step towards handling it.
The next is to send me an email at adam@investorsdirect.com.au and we can have a chat about how we can assist you to set yourself up with the right sort of system you need to start running “The (Your Family Name Goes Here) Family Retirement Business Pty Ltd”!

Every week, I set up people to do exactly that!


1300 663 836

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