How to be The CFO of Your Life

By Caitlin in Money
How to be The CFO of Your Life

As easy as it may seem, managing your finances on a daily basis is much harder than it looks. Even though it seems like such a simple task, dealing with your finances can slowly start to become less and less important as other issues take over.

Let’s say you just started your first “real” job and are now making a steady income for the first time in your life. You’re more than likely confused about how to organize, invest, and spend your money. In reality, controlling and managing your finances isn’t as easy as it seems. With so many big expenses to keep track of, daily expenditures and even emergency costs, it can be overwhelming to manage your money. It’s normal to feel this way at first, especially if you’re new to the world of debt, credit cards, loans, and investments, or what we like to call personal finance.

The first really important thing to realize is that it’s never too late to become the CFO of your life. Take the reigns, grab the bull by its horn, or put your hose to the grindstone, however you want to phrase it, you’re the one who is the most and best qualified to take the job.

Track Your Expenses

If you’re going to be the CFO of your life, you need to know what’s going on with your money. Where it’s coming from and how it’s being spent. To do this, track your expenses every day, for a month, no matter how big or small the purchase is. Take note of all these purchases and make a list in order to find the average amount of money you spend per month. This allows you to visualize your actual spending habits and see where you can cut down on spending.

If you have no idea where your hard earned cash is going, it’s going to be very difficult to make any changes or improvements. When it comes to your finances, ignorance is not bliss. Write it down or save your receipts, so whatever you need to do, after all, you are the boss.

Click here to learn how to create a budget.

Make a Budget

After you’ve tracked your finances for about a month, you’ll be in a great position to create a budget, one that is realistic and tailored to your lifestyle. While everyone’s expenses and wherefore budgets will be different, there are a few core costs that should make up the basis of your budget. These are expenses that you need to pay, for example, housing, food, transportation, and utilities. Generally speaking, these four expenses are not negotiable, meaning you probably can’t go without them. But what you can do is make sure you’re not overpaying for them. Are you spending too much money on food? Do you drive a car that you can’t really afford?

Once you’ve made sure there is plenty of room in your budget for all your necessary expenses you can decide how much you want to put toward other things like paying off debt and saving, these are just as important as your necessary expenses, especially if you’re making enough money to live comfortably.

Next, the fun stuff. These are all things you don’t need to spend money on, they are your wants. Just keep in mind that you don’t need to spend all the money that’s left over, you can and might even need to some months. It’s always in your best interest to have some room for error, in addition to your savings.

If you find sticking to a monthly budget difficult, consider putting yourself on a daily budget. This will allow you to have complete control over your spending and should prevent you from overspending as you know the exact amount of money you’re allowed to spend in order to stick to your budget.

Develop Conscious Spending Habits

If you want to be a successful CFO and increase your net worth while having power over your finances, developing conscious spending habits is mandatory. This includes being very strict with yourself, only buying things that are necessary and that fit within your budget you made from step 2. Erratic spending on useless items is unacceptable from a CFO’s perspective, and will just take you longer to reach financial control and success. Be smart when making purchases, and ask yourself if it were something your accountant would approve of.

Start Investing

An integral part of being the CFO of your finances in making financial decisions that will increase your funds in the future. CFO’s don’t let their money collect dust in a bank but instead, invest it in businesses or stocks in order to turn a profit. This return will increase your income and allow to invest even more next time, making an even bigger profit. If you’re not confident enough to make these investing decisions, it may be worth it to delegate this task to a broker or accountant, they will be able to help guide you and your investments.

Improve Your Credit

This can be done by doing a number of things, such as paying your bills on time and in full (or the minimum amount), paying off any outstanding debt as fast as possible, and not closing old, paid off accounts. Having a good credit score can allow you to take personal and business loans at relatively fair interest rates. This includes mortgages and car loans, as well as unsecured personal loans.

Do you have bad credit? Here’s how you can fix it.

Start Saving

Any CFO will tell you that saving is a compulsory part of gaining control of your finances. One aspect of having control over your funds is having something to fall back on if something goes wrong. For instance, if you become ill or are suddenly laid off, you have a nice nest egg to fall back on. Regulating your finances includes having a backup plan, this should definitely be one of your long-term savings goals.

However, it’s also important to have short-term goals in order to boost your motivating and keep you going. This would be any large purchase you’re interested in making or even a vacation that you want to take this summer.

Making Decisions That Will Benefit Your Future

When making any purchases, whether it’s a car, house, or even furniture, you want to make good decisions that will benefit you in the future and not just now. For example purchasing a well made new car as opposed to a potentially less expensive used car. A new car will last longer and can always be sold in the future, whereas a used car already has the wear and tear from its previous owner. Another example is the decisions you make with regards to your credit card. Using your credit card responsibly can be challenging, but the effects of irresponsible credit use can haunt you for years to come.


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