If it takes a minute to earn money, it can take less than 30 seconds to lose all of it. In simpler words, it is difficult to earn money but easier to lose all of it.
But this is when financial management comes to your rescue. In a nutshell, financial management is to manage the finances of a firm. And in this case, you are the firm. You are the CEO, who must excel in the skill of financial management to be the guardian of your own money.
But the question still remains, how do you do that? How do you manage money like a CEO? Well, here’s how.
How to manage your money like a CEO
1. Take responsibility
You are the proprietor of your own money. You get to decide where to spend it and how much of it to spend.
That being said, you are the shareholder in benefit when the firm earns profit, and you are the one that incurs losses if things go south.
In simpler words, you have to accept that when you are the CEO of your money; you’re the one accountable for everything.
2. Define roles
A household is not just operated by one single person, much like an organization. There are other key professionals equally sharing the workload and responsibilities. In the context of a firm, it is the CEO, COO, and CFO.
A CEO might be the highest authority, but in a household, they can simply be the person who takes the charge of everything and directs others for a profitable and manageable household.
Much like A COO of the company, a COO of the house can be the one who takes care of the day to day operations.
A CFO, lastly, can act as a consultant to the finances of the house.
3. Creating a management system
It all comes down to management. Bearing a close resemblance to the management of a firm, a household 
Strategic management – It involves formulating strategies, analyzing the risk involved, monitoring them post-implementation to your household.
Operation management – It involves operating with an approach that yields profits, but most importantly, induces a systematic efficiency across all the levels of management of the household.
Financial management – It is backed by an objective to earn profits. It requires analysis of finances, including analysis of ROI, risk determination, and consistent monitoring.
Human Capital management – It involves boosting both the productivity and morale of the persons concerned in the household for greater optimization.
4. Budgeting and Savings
An efficient budget planning is the one that results in higher savings. In simpler terms,
An efficient budget produces, S (Savings) = I (Income) – E( Expenditure)
Apart from that, it also involves the decision and strategy that involve retaining and investing. That is, when you know you are saving money, you can simply retain it or invest it in assets (for your household) that directly or indirectly provide you a higher ROI.
5. Projecting
A plan can induce smooth functioning only until things are in your favor and the market is soaring. However, they are both susceptible to change.
That being said, projecting is much like speculation, only this time you are prepared and mindful of future expenditure, contingencies, and losses while creating a plan. Furthermore, it is imperative that you make moderations to the plan while adapting to the market changes when the hard times come.
In the context of the household, it is projecting future expenditures and contingencies to make greater adjustments to your budget for bigger savings.
6. Allocating resources
How to manage your money like a CEO
You now have the plan, you know where to invest being cognizant of the risk and changes, it is time to finally put the plan in action, i.e. Allocate your funds.
And if you have some money still left, you can put it in your savings or create an emergency reserve.
Last but not least
Financial management can be perceived as a very complicated affair, but it’s not. You just have to be mindful and speculative at the same time.
Hey, what are your thoughts on money management? How do you do that? Do you think there might be some tips you can share? We welcome you to our comment section.
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