Spend a few minutes with Randall Dang, and you’ll learn very quickly that he likes numbers. Randall Dang went to school for accounting, and he enjoys several professional distinctions. He is a chartered professional accountant, a certified general accountant, and a certified management accountant. Businesses hire Randall Dang as an accountant to perform duties traditionally designated for a CFO. He helps businesses manage their finances, so leadership can concentrate on other higher order issues.
Unfortunately, when it comes to personal finances, we all can’t hire Randall Dang to do our accounting. But we really don’t need to. Even if you have never taken a course in finance, you can take control of your finances just by thinking like a CFO. So what would a CFO do to manage your finances better if he or she had the chance? Here are several ways to act more like a CFO:
Start Saving: A business needs to have emergency cash and assets on-hand in the event of a market slowdown, new business opportunity, etc. You need to have savings too. Try to save at least 20% of your paycheck and split the rest between fixed and variable costs. If you can’t save this much right away, save what you can and see if there is a way to reduce your fixed and variable costs to meet this goal.
Use Credit Only When You Need to: If a business doesn’t have much cash on hand, it may have to rely on more expensive ways to fund daily operations and payroll. This could mean a business loan. For you, it probably means a credit card. With a credit card, you have to pay interest, which obviously you don’t want to do. Make sure you have access to cash when you need it just in case.
Put Your Assets to Their Best Use: A good business portfolio will include a number of different assets, so it’s not reliant on just one thing. The same holds true in personal finance. Is it smarter to start paying more on your mortgage or use that money to invest in something that could potentially yield higher reward? See where you’re investing and if this is the best way to meet your financial goals.