You’re a whiz at your job. You’re organized and a go-getter. Your boss is impressed with how much work you get done.
Yet, when you get home, you’re tired after a long day. You want to relax and hang out with friends, or read a book, or watch a movie. The last thing you want to do is balance your checkbook and calculate how much you’ve spent this month. What’s the point anyway, when your financial situation never seems to change? You keep living paycheck to paycheck, spending your money on recreation and relaxation. You don’t try to change because this is the way your life has always been.
If so, you’ll want to check out J.D. Roth’s new e-guide, Be Your Own CFO. If you have a better handle on your finances than many people, you may still want to check out this book because Roth offers a whole new way to look at your finances.
The Premise Behind Be Your Own CFO
Just as the title suggests, the premise behind Be Your Own CFO is that you alone are the one in charge of your finances, and just like a CFO, you should make conscious, carefully calculated decisions to get ahead financially.
Roth states early on, “The difference between a good CFO and a great one is the ability to get things done. An effective CFO takes whatever steps necessary to make his company thrive. He’s objective. He’s accountable. He accepts responsibility, creates a plan, and—most importantly—puts that plan into action.”
This includes making your own mission statement, setting a range of goals–both short, mid-range and long term–and creating your own business plan.
The Time Involved
If this sounds like a significant time investment, it is. Roth wants readers to take their finances off auto-pilot and to be actively involved in shaping and growing their finances, just as a CFO would be.
In the beginning, while you’re setting up the mission statement, goals, and business plan, expect to spend a significant amount of time. After you have the system set up, you’ll be working on maintenance, and you’ll need to invest less time.
Other Jobs As CFO
As a CFO of your own finances, Roth advocates that you regularly create other types of reports including a balance sheet, profit and income statement, net worth statement, profit margin statement, and liquidity ratio. He also encourages readers to keep an eye on their credit score.
Again, just like earlier tasks, setting up these initial reports will require a time investment. Once they are set up, maintaining and updating them will take less time.
As your own CFO, Roth advocates taking the emotion out of some of your financial decisions. If your budget (Roth actually advocates a Balanced Money Formula) doesn’t balance, you may want to consider taking radical steps such as selling your house and moving to a smaller, cheaper place or selling your car and walking or biking everywhere.
Again, you want to think like a CFO, taking drastic steps to keep your finances in the black.
While Roth advocates taking charge of your money, including making drastic changes to your lifestyle, he is not encouraging any steps he hasn’t himself already taken. In the last 10 years, Roth has gone from having $35,000 in debt to having $1 million in the bank. He’s also downsized to a smaller place nearer the city where he lives so he could sell his car and bike everywhere.
If you want to change your finances and quit living paycheck to paycheck, the guide, Be Your Own CFO, may be just the thing you need to revolutionize your approach to money as well as your bottom line.