When Taking Work Home with You is a Good Thing: Lessons from the Workplace in Personal Finance Management

Successful businesses are successful for a reason - they manage money wisely and have good systems in place. No instant hit of a product or service will make a business succeed if they don't manage their money, staff, and other resources adequately. The same holds true for personal finance management.

Just like a business operates on a strict budget, carefully monitoring and controlling income and expenses, so must your household operate on a home budget. But that's only the start. To help in your efforts to better manage your money, the following are lessons taken from the playbooks of most successful businesses that you can apply with the same effectiveness in your own home.

Review Historical Financial Data

Successful businesses are constantly reviewing all the historical data they can get their hands on. Of course, for you, that means you first have to have that data on hand. If you already have last year's bank statements, credit card statements, receipts, checkbook registers, tax documents, etc., then you're off to a great start. If you don't keep any of that around, then consider starting (being sure, of course, to keep it all in a secure - meaning locked - location).

With the help of quality personal finance software like Budget Forecaster or Expense Tracker from Strativia, take a look at your finances from last year. Where did your money come from, and where did it all go? By subtracting your total expenses from your total income, you'll instantly learn what sort of cash flow you produced, if any, and you'll start to get a few concrete ideas on ways you can do even better this year.

Staff Properly

Proper staffing is another element of effective business management that holds true for personal finance management as well. To apply this concept to your home life, delegate responsibilities to the family members best suited for each task. You should assign specific members of your household certain household duties in order to take some of the workload off your hands. This will free you up to concentrate on better management. That is to say, better household management makes for better personal finance management.

If the "staff member" is capable but unqualified for the job, then train them. If you experience resistance, clue those parties in to why you're asking them to do this. Surely your family has goals, both shared and individual. Show them how freeing you up to handle those tasks that only you and nobody else can do will help the entire business...oops, family to achieve their goals.

Give Incentives

By the same token, incorporate a rewards system into your personal finance management program, both for yourself and for your family. Frame entertainment expenses, for example, as rewards since they are often the first expenses to be sacrificed when the purse strings are tight.

Create milestones, the achievement of which allows you all to experience some gratifying incentive, whether together or individually. Does your family like to dine out once a week? Then start making that meal a consequence of having reached certain milestones first. If those duties- chores - aren't completed in time, the reward gets postponed until they are.

Maybe your son wants a video game, maybe you want a bubble bath. The key is to choose rewards that are appealing enough to inspire the recipient and yet still appropriate for the tasks in question. Bigger tasks mean bigger rewards.

Support Your Team

Supervise your "staff" proactively, helping them to excel in the tasks assigned them. If training needs updating, procedures need changing, or even the delegation of assignments needs adjusting, do whatever is necessary to aid your family in succeeding at their assigned endeavors. Positive reinforcement is always more effective than punishment. And nagging rarely works, if ever. But a calm discussion of how you all can better support one another in making your home budget work just might. Remember, teamwork starts at the top.

Manage Stress

Finally, numerous studies have shown that while some stress in the workplace supports enhanced performance, excessive stress is detrimental to any business, all the way down to the bottom line. The costs of stress on any budget - business or home - can be insurmountable without addressing the problem where it lies.

Too much stress causes people to act hastily, to make rash decisions, and to use poor judgment. All of this costs you money. An unhappy partner or "employee" could end up sabotaging your "business's" financial plan, whether intentionally or not. Plus the physical effects of prolonged stress could start inflating your health care costs if you don't watch out.

Best to incorporate a bit of preventative care into your personal finance management strategy by planning relaxation and stress reduction into your schedule and, where applicable, into your home budget. The time and money spent on reducing the stress levels of all your family members will save you from much greater costs in the future, both to your wallet and to you and your family's well-being.

Kenneth C. Kelly is the President of Strativia, a financial management software development and services company specializing in applications for personal and business use.  Strativia is the developer of Budget Forecaster, a sophisticated home budget and personal finance management software package.  Website: www.strativia.com. Contact: info@strativia.com.

Budgeting & Personal Finance

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