We spend a lot of time helping businesses improve their profits and cash-flow. When we stopped to think about all the ideas and experience we have managing and controlling risk and costs in a business, we realized many of these ideas also apply to individuals managing their daily lives and personal finances.
So we looked at 3 areas and put together some tips for managing your own financial risks. Hopefully, you find a few of these ideas helpful in providing peace of mind and helping you improve your personal “bottom line”.
Managing your Property Risk:
We all buy insurance for our cars, homes and other assets we want to protect. It can be expensive so here are some areas to look at for increased coverage and/or reducing costs:
- Quote your home and auto insurance every 2 or 3 years and price compare higher deductibles, weighing the risk verses cost savings – $250 vs $500 vs $1,000. This is often worth your time.
- Combine all your risks with one carrier (car, boat, primary home, vacation homes etc.). This provides the best premium value, and in some cases, the best coverage.
- Record the contents of your home on video. Cell phones and even inexpensive digital cameras have video capability. This can be extremely valuable in the event of a fire or burglary.
Managing your Money:
We all have banking relationships that provide accounts and services that help us manage our money. Here are some tips to better manage your banking relationship and minimize fees:
- Visit your Banker once a year to see if you’re on the best plan. Banks come out all the time with new programs that provide better services, interest returns and cost saving.
- Sign up for overdraft protection on all your accounts. There are ways to setup your accounts that avoid overdraft fees that can run as high as $50. Link to a line of credit, credit card or savings are a few examples
- Pay your bills online. If you’re still mailing paper checks STOP! This is a free service that is safe, easy, saves time, saves postage, saves trees and provides online payment history. What a GREAT deal!
Managing your Financial Future:
We all need to plan for our financial futures. There are lots of financial planners who help people do this and while we are not financial planners, we think this financial planning hierarchy makes a lot of sense and sets important priorities:
- Your first priority is providing proper protection to your property, health and estate. You do this through health, life, property and disability insurance and a will or trust for your estate. It’s not wise investing in a retirement plan if you don’t have these area covered first!
- Second priority, managing your day-to-day finances with the goal of building savings to cover taxes and emergencies. Have a plan for not spending more than you earn. Controlling debt and planning for the unexpected is the goal.
- Once the first two priorities of protection and savings are covered, you can move to the third priority which is retirement planning. Retirement planning can include investing in securities, real-estate , business or a qualified retirement plan.
Being a CFO for a business involves balancing risk, reward and costs. This balancing takes a desire to address issues before they become big problems. It really comes down to personal responsibility and accountability when managing your financial affairs. Be proactive in these areas as see how you can reduce your financial stress and increase your “bottom line”.