Becoming Your Own Personal CFO: Mastering Financial Empowerment
By ShaChena Gibbs
Discussing budgets and personal finances might not be everyone’s favorite conversation topic, including mine. Even seasoned bank executives can face challenges in this arena. However, if you’re an entrepreneurial powerhouse, this financial juggling act becomes even more complex. Your business often takes center stage, leaving your personal finances on the backburner. Then, one day, you’re hit with the startling realization that you’re not saving enough for rainy days, and panic sets in.
Here’s the transformative shift: Harness your professional expertise and step into the role of your personal CFO (Chief Financial Officer). Embrace this CFO role, and you’ll discover that managing your personal finances becomes a more feasible endeavor. To initiate this process, let’s introduce five crucial principles for handling your personal finances with the same dedication as you do for your business operations:
- Embrace Your Inner Board of Directors: Making sound decisions requires a clear sense of purpose. Just as businesses rely on mission statements to stay aligned with their objectives, it’s your responsibility to define your mission and track your progress by setting both financial and life goals.
- Master Your Operating Costs: Businesses meticulously track their monthly expenses based on historical spending patterns. Likewise, it’s crucial for individuals to understand what it takes to sustain their lifestyles. Instead of creating rigid budgets, opt for a “cash flow statement” that records your actual monthly expenditures across various categories.
- Calculate Your Net Worth: Companies gauge their progress through balance sheets, which list assets and liabilities. Your net worth serves as your personal balance sheet, encompassing everything you own, such as bank accounts, investments, vehicles, and real estate, minus your outstanding debts. Regularly assess your net worth to ensure you’re advancing toward your personal goals, preventing financial surprises down the road.
- Strategically Forecast Financial Outcomes: Businesses employ “scenario planning” to make crucial decisions by evaluating potential outcomes. You can apply the same technique to make informed financial choices. For any decision, consider two options and analyze their impact on your cash flow and net worth. Remember, it’s not about “good” or “bad” choices; it’s about choices that align with your goals.
- Annual Progress Reports for Your Finances: Just as corporations assess their yearly progress in annual reports, you should review your priorities annually. Have you achieved your goals? Have your spending habits evolved? Did you live within your means? Did you save as intended?
Your financial assets deserve the same attention and care as your business endeavors. Dedicate the time and effort, for ultimately, the investment you make in managing your finances is an investment in yourself and your dreams.
Incorporating these financial principles can empower women business owners, aged 22–65, to seize control of their financial destinies and thrive as their own financial stewards.
Keep Rising,
ShaChena Gibbs
Meet ShaChena Gibbs, CEO/Founder of Real Sisters Rising Women Business Association. ShaChena is an award-winning entrepreneur, educator, and association leader who has dedicated her efforts to helping businesses achieve their goals. She has over a decade of experience and is well-versed in the home-based business industry and the difficulties that businesses face on a daily basis. Her expertise spans market research, financial analysis, strategy formulation, and product development. She is a natural problem solver and leader with the ability to build strong relationships. ShaChena is assisting businesses in growing and is driven to make an impact in the world.