How to be the Family CFO by Kim Snider
Snider wants you to treat your personal finances with the same care and scrutiny a CFO would use in managing a corporation's bottom line. According to Snider, the family CFO uses three tools: planning, managing assets and liabilities, and managing behavior. These tools are taught within the context of her four steps:
Plan prudently. Beginning with personal financial statements (one for income, one for balances), Snider wants you to examine where you're starting. Next she asks you to come up with a vision. She helps you break down your vision into categories and then specific goals using a noun, verb, and a date. An example is, "Pay off all debt, except mortgage, by January 1st, 2009."
Lastly Snider asks you to face the difficult task of planning for the inevitable.
Save prodigiously. If you are financially savvy, you may already have these steps in place, but I'd venture that some of you are like me, just getting started on our road to financial freedom. Snider suggests setting up an emergency fund with six months expenses (not six months salary!), knowing the difference between good debt and bad debt, taking advantage of tax-deferred accounts (especially 401Ks), and saving for retirement before college.
Invest wisely. Snider starts this section by asking, "What is your money's higher purpose?" She challenges you to aim big, and then asks you to refine your investment plan by having you assess your temperament, your horizon (how long you have to invest), and where you stand on the risk/reward continuum. There are additional chapters where Kim discusses starting early, taxes on investments, investing your money yourself, creating passive income, minding inflation, and remembering to stay the course.
Manage risk. Managing risk starts with protecting your most valuable capital you! In these chapters, the author discusses various types of insurance, identity theft, and maintaining your credit score. She touches on topics aren't often covered, such as long-term care insurance, medical identity theft, and protecting yourself from obsolescence.
How to be the Family CFO at Amazon
@jmacofearth
permalink: http://bit.ly/family-cfo
