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Become Your Own Personal CFO

Discussion in 'BlackHat Lounge' started by Diamond Damien, Nov 7, 2006.

  1. Diamond Damien

    Diamond Damien Owner BlackHatWorld Staff Member Jr. VIP

    Oct 27, 2005
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    Become Your Own Personal CFO

    Budgets and personal finances are not most people?s favorite topics, and certainly not one of mine. Even bank executives have problems in this area, but if you?re an entrepreneur so do you. You?re concentrating so much time on your business, your personal checkbook takes a back seat. Then one day you are met with the startling fact that you?re not saving enough for lean times and you panic.

    Well, just apply your professional talents to the situation and become your own personal CFO. By using your CFO eyes on the situation, it somehow tempers the pain of dealing with your own money. To get started, here are 5 rules for treating your personal finances like a business:

    • Be Your Own Board of Directors. To make good decisions, you must know what you?re trying to achieve. In business, Board of Directors write mission statements to keep the company on track with goals. At home, it?s up to you to define your mission and make sure you?re fulfilling it by writing down your goals. Not just your financial goals either, but your ?life? goals.

    • Know Your Operating Costs. Do you know what you spend every month on average? Businesses do because they base their budgets on historic spending patterns. Most people, however, don?t know what it costs to keep their lives running. You can make out detailed budgets, but find out at the end of the month that you haven?t stuck to it. So instead of doing a budget that dictates how much to spend, do a ?cash flow statement? that records how much you actually spend each month broken into several categories.

    • Know Your Net Worth. Companies measure progress toward goals through balance sheets which list their assets and liabilities. Your net worth is your balance sheet where you list everything that you own. That means your checking and savings accounts, investments, car, house, etc. minus everything you owe. Track your net worth quarterly to make sure you?re moving toward your personal goals. Without this step, you might not see the impact of your money decisions until it?s too late.

    • Forecast Money Decisions Results. When a business makes important decisions, they use a process called ?scenario planning?. They look at the possible outcomes of one choice compare to another. You can use the same process to make smart money decisions. For any choice, pick two options, and then look at what each answer would do to your cash flow and net worth. Remember, there are no ?good? or ?bad? choices ? only choices that put you closer or farther from your goals.

    • Track Progress by Annual Reports. Just as companies assess their progress in their annual reports, you need to review your list of priorities every year. Have you accomplished any goals? Have your spending patterns changed? Did you spend less than you earned? Did you save as much as you planned?

    You need to treat your money like you treat your business. Give it the time it deserves, because in the end the time you spend is really an investment in yourself and your dreams.
  2. cashsalute

    cashsalute BANNED BANNED

    Nov 5, 2007
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    Ugh yup finances and legalities suck, but its fun finding blackhat ways around it all :)
  3. caretaker2007

    caretaker2007 Power Member

    Dec 20, 2007
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    To create income streams
    In a 6 by 3 plot
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    It boils down to make a business plan, including the financial and marketing plans, and monitor your progress against it. Plan for all the contingencies you can forsee, and, if you think you have gapping holes, as someone you trust to look it over. Do not become a slave to your plan, keep it flexible to absorb new ideas and technologies, and drop those that have become stagnant.

    I have met millionaires that had their very first business plan written on a napkin framed on their office walls. They did it over lunch one day and continued to improve upon it as time went on.