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October 2007: Business Is Good, But the House Is a Wreck |
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Business is Good, But the House is a Wreck
Four ways to get your personal finances in order.
By Michael J. Searcy
If you are a savvy business owner, you have worked hard to develop your business both strategically and operationally. You have spent countless hours brainstorming and developing a company mission statement. Even your business plan leaves your colleagues weak in the knees. As the company visionary, you know where your business is headed and how you will get there. At the end of the day, you’ve dotted your “i’s” and crossed your “t’s.” You can head home knowing that business is good.
With all the detail, strategy and effort put into making your business succeed, have you neglected getting your own house in order? Too often, business owners put their personal financial affairs on the back burner, with a vague notion that they will attend to those matters “someday.” As we know, “someday” has a strange way of coming at the most inconvenient of times. However, by applying some sound business practices to your personal affairs, you may be able to enjoy the same level of success in your personal finances as you do in your business.
1. Develop a personal mission statement.
While it may sound a bit hokey, having a clear idea of who you are and, more importantly, who you want to be, can mean the difference between a fulfilled life and a life spent “just getting by.” Most businesses owners have spent considerable time and thought developing their company mission statement. The mission statement is designed to help guide the company through the myriad of decisions that must be made daily. Similarly, a personal mission statement will give you greater clarity about those things you hold most dear. Having this clarity will help you make decisions that are in line with your core values and beliefs. For example, if your personal mission statement involves being an active participant in your family, you might choose saving for a family getaway over saving for the purchase of a new car.
2. Establish a written financial plan.
Do you plan to retire? Does your child have her heart set on attending Harvard? Would you like to see the ancient ruins of Greece? Unless you plan on winning the lottery, you will probably have to plan ahead to make those dreams a reality. Simply put, a financial plan will help you identify your goals and provide you with a roadmap to reach those goals. Just as a business plan outlines the strategy for company growth and performance, a written financial plan gives you the ability to set short-term goals (i.e., [U1]family vacation), as well as long-term ones (i.e., retiring in style). It also provides you with benchmarks to measure your progress towards those goals, allowing you to make adjustments along the way. There will always be things clamoring for your dollars, and a written financial plan simply helps you know when to say “no.”
3. Create a personal budget.
If you continually find yourself surprised by your credit card statement, you may need to put some time into creating and maintaining a personal budget. If you do not know how much you are spending each month, it may be very difficult for you to achieve any long-term financial goals. A budget gives you the freedom to work towards your future dreams by making small decisions in the present. Successful companies use operating budgets to keep their bottom line in the black; likewise, those who have mastered the art of maintaining a personal budget are more likely to enjoy personal financial success.
4. Plan for the worst-case scenario.
Most people do not want to plan for the possibility of their own death; however, it is something we all will face someday. Savvy business owners plan for the unexpected by developing succession plans. In the event of a tragic loss, a succession plan provides the business with the possibility of success beyond the life of the business owner. Likewise, a carefully written estate plan provides direction to those you have left behind. Without an estate plan, all the decisions, details and logistics of your estate (whether large or small) are left to those closest to you and the courts. Since people who are experiencing grief are the most ill-equipped to make decisions, estate plans provide a loving way to pass on your legacy, removing the burden of decisions from your loved ones’ shoulders.
By applying some sound business practices to their personal affairs, business owners may be able to enjoy the same level of success in their personal finances as they do in their business.
Michael J. Searcy is president of Searcy Financial Services Inc., a registered investment advisory and financial planning firm located in Overland Park. As a Certified Financial Planner™ and Accredited Investment Fiduciary Analyst™, he specializes in providing a unique and highly personalized financial planning and money management service for individuals and businesses. For additional information, visit www.SearcyFinancial.com.
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