How Changing Your Mindset Will COMPLETELY Change Your Budget
What mindset is that? The Mindset of a CFO. Yes, you ARE a CFO!
The biggest dream I have had for myself was to someday become a CFO of a successful company. It’s not just the title I want, but the authority that comes with it. The authority to be able to make a difference in my company on a larger scale. Each of my various jobs in the finance industry provided me with a different insight into the world of finance. In my journal of starting my own company, I had a huge epiphany. I’M ALREADY A CFO! The even bigger new is, YOU ARE ONE TOO! Yes, you are a CFO and don’t even know it.
I am talking about your own finances. Regardless of whether you have been very diligent in managing your money, or whether you have struggled, your title remains solid. Initially, the correlation between being a CFO of a company and a CFO of your finances may seem a bit obvious. Yes, you are managing the money which comes in and goes out just like a CFO would in a company. Yes, you make the ultimate decisions of any residual cash after the bills just like a CFO would have a say in a company. These two items appear to be it, right? The truth is, the similarities between being a CFO of a company and being a CFO of your own finances run very deep. So hold on, and we will talk about five key items you do with your finances, just like a CFO of a company.
1.You Know Your Business
If you were CFO from the start of a new company, or whether you moved up through the ranks to the level of CFO, your title means something. Your title means to everyone else, you know who, what, why, and how much for the company. You have been given the authority to make the big financial decisions which will affect the bottom-line. In the end, the buck stops with you! Now think about your personal finances. Everything I just described applies to your financial situation.
I can’t provide details about your personal finance life, but I can talk about mine. There is no doubt in my mind my wife would attest my CFO-like status for our finances. I have a working budget on my computer, as well as in my head. I like to plan for big expenses long in advance. Although she gets annoyed by it quite a bit of the time, I HATE buying random items which we may or may not need. I constantly monitor our accounts to make sure I know when certain bills come out, and she is the first one I talk to when there is a discrepancy which I don’t understand. Typically it comes down to a simple misunderstanding of where money was to be spent. I should clarify, that we BOTH have access to the accounts and BOTH make major financial decisions. However, as I have the experience and the knowledge, she trusts me to manage everything. Thus, by majority vote, I am the CFO!
2. You See the Big Picture
CFO’s have at some point been recognized for their keen ability to see and understand numbers more than others. They have seen and learned enough in their career to understand all of the individual parts and how they interact with the bigger machine as a whole. They can see everything working together in perfect harmony. This also allows them to understand the root cause of an issue when it arises. These abilities are key for a CFO. The same is key for you and your finances. Even if you don’t have the ability now, it is something you can come to learn in time.
In my personal financial situation, I have developed these characteristics over time – partly because of education, partly as a result of financial failures. You learn a great deal through trial and error. In all honesty, I have driven my wife crazy many times with this vision as well. I see everything in terms of bills, income, future purchases, and possible contingencies that might affect the finances. There are Pros and Cons with this knowledge. The biggest Con is the probability of saying no to purchases on a regular basis. You or your partner may want something, but you know it can’t happen, based on your understanding of your finances. You know where your money is, and where it needs to go.
On the other hand, the biggest Pro is the ability to say yes to the important things. An example of this happened very recently to my family. My wife wanted a new computer. Normally, I would have had to say no immediately. However, due to the intricate understanding of how everything was running with our finances, I (the CFO) was able to easily make it happen. It is not always easy to be able to make decisions when it comes to the finances. I can assure you, it will be worth it if you keep your priorities straight.
3. Know What You DON’T Know
As every good entrepreneur, CFO, or CEO should know, you should never stop learning. The head of a company is not going to know everything. Although it may seem like they do, it is only an illusion. The truth is, they are always learning. They read books, watch the news, and monitor the markets. Many companies also support this idea on continual learning. They offer employee development programs and promote learning internally and externally. This is a good characteristic to have not just in business, but also in your normal everyday life. As the saying goes, Knowledge is Power!
Despite what some of my friends might think, I was not born with a briefcase in hand, ready to talk to my parents about their retirement investments. It took me a great number of years to attain the knowledge I currently have about business and finance. Even today I am listening to the market news, watch Bloomberg TV, and do research about best practices for finance. I know I don’t know everything there is to know about managing money, but I am always learning. The best thing about this blog is the requirement to continue to do research about new ideas about finance, and it is very rewarding.
The biggest mindset change you need to make is understanding that YOU are in charge of your money, not the other way around. With a working budget, and taking ownership of your money, you will be the CFO of your finances.