Be The CEO And CFO Of Your Life: Manage Your Money Like A Business
One statement that has been continually bouncing around my head since I read it is, be the CEO and CFO of your life.
As soon as I read that on JD’s Money Boss 101 page, I immediately nodded my head in approval and did a small fist pump.
It was such a powerful, yet simple statement on taking control of your money and life. The focus of the idea behind be your own CEO and CFO was to manage your money as if you were a small business.
JD nailed it with this statement. I couldn’t agree more and wish I’d taken this mindset in my teens and early 20’s. I definitely would have avoided the stupid money mistakes I made. Or found the personal finance resources and content that saved my financial life sooner.
Before we dive into JD’s core idea and build out further on how we can apply this concept in our own lives, let’s quickly look at what a traditional CEO and CFO is.
Being The CEO Of Your Life
What does Investopedia have to say about CEOs?
They define it as, “the highest-ranking executive in a company, and their primary responsibilities include making major corporate decisions, managing the overall operations and resources of a company.”
If we’re applying that concept to our life, it’s pretty clear. You’re the boss, primary decision maker and need to take responsibility for managing the journey.
Being The CFO Of Your Money
Now, what exactly is a CFO?
According to Investopedia, a CFO is “the senior executive responsible for managing the financial actions of a company. The CFO’s duties include tracking cash flow and financial planning as well as analyzing the company’s financial strengths and weaknesses and proposing corrective actions.”
Again, pretty clear how we can take this senior executive stance to our own money management.
The Core Idea By JD Roth
If you want to be the CEO and CFO of your life, JD boils this down to 3 main focuses in his core idea.
Based on our definitions from Investopedia, these seem perfectly aligned to what we’d expect the CEO and CFO of a business to prioritize.
So what are the fundamental focus points from JD?
These core ideas on how to be CEO and CFO of your life are:
- Crafting a personal mission statement
- Arrange your life to reflect this mission
- Boost your profit to achieve your goals
You have a central purpose, manage your life to best achieve that purpose and set yourself up for financial success by growing your profit (income – expenses).
Three core ideas to live by to take control of your money and life.
I want to dig into each of these foundations to provide examples from my own life along with a collection of resources and other elements based on the idea of managing your life and money like a business.
Crafting A Personal Mission Statement
The mission statement of a business outlines its central purpose. Ideally this is the common thread woven into all elements of the business that guides the decision making from the highest level down to the most tactical.
You can do the same for your money and life with a personal mission statement.
It’s an “invisible” rudder steering the ship.
For example, here’s something I drafted for my own personal statement:
“I want to be happy, healthy and continually moving forward in everything I do. I want to live a purposeful life of financial freedom and enjoy it as best possible with the people I love and care about”.
This encompasses everything I’m currently pursuing in my life. The themes of money, happiness and personal development are rooted throughout that statement. This rudder directs where I focus my energy and effort, often answering the “why” as to why I do something.
Arrange Your Life To Reflect The Mission
After creating your personal mission statement you need to start making adjustments in your life to fit that mission. Otherwise it’s just an empty statement that holds no weight or relevance.
Take the mission statement I drafted above for my own life.
If I wasn’t setting up my habits and mindset to reflect those core concepts of happiness, health and personal development, my central purpose would be disconnected from how I actually live my life.
Just like personal finances are personal, your mission statement will be unique to your own life and central purpose. To be the CEO and CFO of your life, JD has three organizational recommendations: organize your time, organize your space and then optimize and automate.
Below are some areas of my life that I’ve arranged to reflect my mission and fit JD’s recommendations.
Building Habits & A Mindset To Fit Your Mission
Given my personal focus on “happiness, health and continually moving forward”, I’ve developed habits and a system to support that purpose.
The goal of these habits is to maximize my time, increase my happiness and health and better control my money.
Every night before I go to bed I follow a consistent routine to set myself up for success the next morning. These habits are built around spiking productivity from the moment I wake up.
I touch on the 5 simple strategies I’ve put in place in this a productive day starts the night before post.
Waking Up At 5AM
My mantra over the last 2+ years has been win the morning, win the day. I had slipped into unproductive, downward trajectory in my life about 30 months ago. I decided to start waking up at 5am to make gains with my health, productivity and finances.
It changed my life.
It’s allow me to focus my mornings on pushing forward various aspects of my life. Check my waking up at 5am changed my life post to dive deeper.
Monthly Personal Finance Checklist
Taking control of my money is a constant theme across my personal mission statement. In order to continually move forward and live a purposeful life, finances need to be at the top of my priority list.
I created a monthly personal finance status check that includes 13 items I review to ensure I’m on track with my money.
This is a small habit that reflects my mission and was easily implemented into my routine.
I approach thinking about money and life from one of abundance (not scarcity). This is a concept Stephen Covey talks about is his extremely popular book The 7 Habits Of Highly Effective People.
This abundance mindset is centred around increasing my income, taking risks, a willingness to change my life, an understanding of the countless opportunities and the motivation to chase what I wanted.
Side hustles, starting a business, supporting and appreciating others, growing my professional income in order to unlock time and freedom in the future so I can live the life I wanted.
There are an abundance of opportunities available that will help me best navigate my life to fit that personal mission statement.
Boost Your Profit
The CEO and CFO of any business is likely focused on generating profits, or should be if they’re a commercial entity.
As the executive of your own money and life, you need to do the same if financial betterment is part of your mission.
JD points out clearly in his Money Boss 101 overview that no two paths are the same. Personal finances, are indeed personal. What works for one, may not be applicable to another.
However, I view this area of your business management strategy being a 1-2 punch: optimize existing finances and grow your income.
Optimize Existing Expenses
The more straightforward aspect of boosting your profit is to best use the money you’re currently making and spending.
In my own life, there was plenty of improvements to be made based on my spending habits. I touched on the spending audit I performed in the 5 easy wins I had at the start of my personal finance journey.
A general approach to improving current spending as the CFO in your life might be:
However, the biggest gains will likely be made by taking control of the ‘big 3 expenses’: accommodation, transportation & food.
In an article from Business Insider, the data found that the top 20% of American household incomes spend 57.2% of their budget on the ‘big 3’. While the bottom 20% of American household incomes spend 70.3% of their money on the ‘big 3’.
Clearly, both sides of the financial fence spend the majority of their budgets on those 3 areas. Therefore, mastering those is the biggest opportunity for you, the CEO and CFO of your life.
In a post outlining financial focuses for new grads, I talked about the ‘big 3’ and lots of those points are applicable to all age ranges. Two particular things that have helped me control the ‘big 3’ are: walking to work for 4 years straight and 13 steps to save money on groceries.
This post from Gary at Super Saving Tips features great strategies to better control the big 3 expenses.
The second lever of boosting profits as the CEO and CFO of your life would be through increasing your business (personal) revenue.
Any net gains available by growth in revenue is offset by also increasing your spending through lifestyle inflation.
So this additional income won’t be most beneficial unless you: master your existing expenses above and then have the majority (or all) of your income growth go towards achieving your financial goals.
However, as we’ve touched on before, personal finances are personal. You have to the CEO and CFO of your life that best fits your mission and lifestyle.
In the business world this income growth would generally come from increasing the sales volume or unit price of the products and services you provide. Or perhaps by adding new revenue streams through acquisitions or launching new verticals.
How would the average individual go about growing their income?
- Get A Promotion Or Raise: Check out this great post from ESI Money on 7 steps to manage your career and make millions more.
- Create Additional Income Streams: Here are 35+ side hustles that almost anyone can do to earn more money.
- Scale An Existing Entrepreneurial Endeavour: This article discusses scaling your small business with advice from 9 successful entrepreneurs.
Every situation is unique so it can be hard-pressed to find an applicable solution for all CEOs and CFOs. If part of your personal mission statement is centered on financial freedom or monetary betterment, you need to be actively looking to continually grow your income.
As the CEO and CFO of your life, keep searching for those opportunities and jump when the opportunities arise.
Other Lessons From The Business World To Be The CEO And CFO Of Your Life
The concepts of having a personal mission statement, adjusting your life to fit that and boosting your profits, have us positioned to be an outstanding CEO and CFO of your life.
We’ve taken the mindset of managing our money like a business.
However, in addition to the 3 core ideas above that JD shared in his Money Boss 101, there are a handful of other strategies and practices from the business world we can apply.
Let’s explore 3 more areas that are applicable to our life and money:
- Objectives And Goal Setting
- Status Reports And Key Performance Indicators
- Human Resources Programs
There are countless other lessons from the business world we could apply to our lives. These billionaire dollar organizations must be doing something right at the CEO and CFO level to see such successes and growth.
For now, we will focus on three easy to implement strategies applicable to your own money and life.
Objectives And Goal Setting
Similar to any reputable corporation, we need to have set goals (objectives) for our money. A CEO and CFO would create these targets to strive for inside a business.
You need to do the same.
With our personal finances we’re basically asking ourselves:
What are you trying to achieve with your money? How do we best get there in the short and long term?
One popular way companies love to talk about goals is through what’s known as the SMART framework. If you’ve read any business management or personal development textbook or goal setting article, you’ve likely crossed paths with the SMART concept before.
As cliche as it might be, it’s an effective framework for goals.
As the CEO and CFO of your life, you can use this lense to build out your money objectives too.
Businesses love acronyms and you get bonus points if they spell something connected to the subject. So whoever invented the term SMART goals was definitely the talk of the office that week.
A quick example of a short to mid-term goal that touches on aspects of the SMART goal method could be:
“Saving $5,000 over the next year to build an emergency fund to cover unforeseen expenses.”
It’s specific, measurable, attainable (depending on your finances), relevant and time-based. You can use this practice for your financial goals in any area of your life.
Examine the personal mission statement you made earlier. Write down 3-5 short-term goals that can serve as milestones to achieve in the start of that journey. Expand that to the mid and long term.
What do you need to accomplish with your money and life in order to live that mission statement?
If you’re looking for potential financial goals to strive for as a CEO and CFO of your life, check out these 10 financial goals to strive for from Good Financial Cents.
Status Reports And Key Performance Indicators
Just like the CEO’s and CFO’s of Apple and Google or a small local business, you need to know the status of your money.
How is the business (you) tracking in regards to those goals and overall mission? Are the finances aligned with where you projected?
As you look to become the CEO and CFO of your life, one number that can help you do this is tracking your net worth.
The calculation behind your net worth is actually pretty simple. It boils down to Net Worth = Assets – Liabilities. That’s it.
You’re taking everything you own or hold of value and are subtracting everything you owe or are obligated through debt to repay. The outcome positive (or negative), is your net worth. The bigger the number, the “better”.
Your net worth number is your personal financial snapshot or financial health indicator.
This is an ideal figure to use as a CEO and CFO of your life to quickly see the progress you’re making with your finances. One number that builds in (almost) all nuances of your finances into a single data point.
Human Resources Programs
Ugh. HR?!? That department…
Hear me out.
They provide many benefits that can be superceded into being the CEO and CFO of your life.
Two specific areas HR programs would benefit your own financial situation and wellness are:
- Personal Development
- Rewards & Recognition
Based on my personal mission statement, I want to keep moving forward and also enjoy life along the way as best possible. These HR concepts of personal development and rewards and recognition would align with that.
Generally the HR Department inside a business will have education grants and opportunities available for personal development.
Whether it’s for attending conferences, taking courses, an additional resources library or access to a mentor. A “good” business would be engaged with growing their top employees.
You can leverage this concept as the CEO and CFO of your own life.
Luckily, you’re the top employee and can direct resources at your development. Also, not all these personal development opportunities need to have a cost-associated.
Whether you want to learn more about personal finances, master a new skill, start a hobby or relax to reap the health and wellness benefits, there are countless avenues to do so.
- Books: Check out these books on personal and professional development from my 2018 reading list and the book recommendations page I created.
- Podcasts: Here are the 30+ best personal finance, investing and side hustle podcasts. Plus another 75+ podcasts to help improve your life, finances, health and more.
- Courses: I pulled together a list 55+ online courses for millennials and entrepreneurs from Udemy.
- Vacations: Vacations provide numerous benefits to your health and wellness. If you’re planning one, check out the travel hacking resource guide with 70+ tools and tips to travel more, for less.
- More Opportunities: There are plenty of other ways to invest in yourself in order to grow and develop.
Rewards & Recognition
Finally, the HR Department inside a business is generally responsible for throwing the Holiday parties, annual awards, monthly MVPs and other rewards programs.
As the CEO and CFO of your life, you need to (or should) celebrate the successes you’ve had.
The road to financial betterment can be a long, thankless grind. The path will likely take discipline, diligence, short-term sacrifices and ignoring the FOMO (fear of missing out). One of the easiest ways to get worn out and veer off course is by depriving yourself of any positive reinforcement.
Lifehack posted an article on How To Celebrate Small Wins To Achieve Big Goals, that touches on how celebrating along the journey will keep you motivated to the big picture.
You’re the CEO and CFO of your life so you know what fits best for you.
In Closing…Be The CEO and CFO Of Your Life
After reading that Money Boss 101 statement from JD, I knew it would stick with me.
Being the CEO and CFO of your life is a mindset rooted in delivering you the returns you desire most. Whether that’s financial freedom, continued personal growth, improving your happiness or whatever your central purpose might be, approaching that like an effective, efficient business will support you in reaching that.
Start with the 3 core concepts of how to be the CEO and CFO of your life that JD suggested:
- Crafting a personal mission statement
- Arrange your life to reflect this mission
- Boost your profit to achieve your goals
This journey called life is going to have many twists and turns. It’ll throw challenges at you that might veer you off course at times. Thankfully, you can be flexible and adapt.
As the CEO and CFO of your life, you’re in charge of the journey.
What does being the CEO and CFO of your life mean to you?
What other lessons from the business world can we leverage in our own financial lives?
Let me know in the comments below.
Finally, a big thanks to JD Roth for inspiring this mindset. Head over to Get Rich Slowly and check out all of his amazing posts to help you master your finances.
Here are some other posts to help you take control of your money and life:
- 15 Smart Money Moves You Can (Easily) Make This Month
- The Best Personal Finance Podcasts – 30+ Money, Investing And Side Hustle Shows
- Financial Advice From 29 Personal Finance Bloggers: A Memo To The Next Generation
- Building Good Money Habits – Make Your Own Money Momentum
- The Personal Finance Resources And Content That Saved My Life
- Waking Up At 5AM Changed My Life – Win The Morning, Win The Day