The Business of Running Your Home

In this economy,  the most efficient and well planned businesses have the best chance of survival.  The same goes for our households.  So why not  run our households more like businesses?

A good year for a business starts off with a good business plan.  A plan for the business of your household doesn’t have to be a complicated document; a one page summary of your family’s vision and strategy that can be posted on the fridge is just right.

Your Mission Statement

The first part of the plan is to develop a family mission statement.  What is important to your family?  It might be “to be thankful people and share with our community” or “we value education and work to provide each member of our family opportunities to learn” or “to achieve financial independence and have the freedom to travel.”  Once you have that in place, think about your strategic intent; in other words, where are you going as a family, and what will the numbers look like when you get there?  Do you strive to give a percentage of your income?  If you want to achieve financial independence by age 50, how much will you need to save?  Break your strategic intent into three to five year goals.  It’s easier to focus on a reachable goal than on something that is many years out.

Annual Goals

Now break your three to five year goals down further, into a specific goal you can achieve this year, such as reducing credit card debt by 50% or increasing profit (savings) by 10%.  Then come up with three to five specific, measurable actions you can take to meet that goal, such as increasing your 401(k) contribution, or paying for everyday expenses with cash or debit card instead of credit.  Evaluate your progress each quarter, and include a family reward or celebration if you’re on track.

Think like a CFO

In most families, one member has more time or inclination to act as the Chief Financial Officer and handle the books.  But the CFO can’t work alone; the Board of Directors (aka spouse or partner) needs to be involved as well.  While one may handle the day to day family finances, the other must be aware of what’s going on, so both are on the same page, but also in case something should happen to the family CFO.  Communication is key; both partners should have input into the budget, and review a monthly or quarterly profit and loss statement and balance sheet.

Your profit margin is important.  Any business needs to operate in the black to be successful, and so should your household.  In other words, the money that you save each year is your profit.  If you’re not saving or are going into debt, your business is stagnating or shrinking.  When you make your annual spending plan, include a profit goal.  Cash flow is the lifeblood of business; so too family finance.  Control your accounts receivables; don’t let insurance claims, rebates, or job reimbursements slip by for example, and keep good records to maximize your tax deductions.  When it comes to your vendors, or the people and companies you do business with, review them periodically; are you happy with their work?  Is it time to have your insurance policy quoted again?  How is your credit—do vendors want to do business with you?  In this credit climate, your credit score is one of your most valuable financial assets.  If you haven’t checked your credit report recently, go now to and get your free copy (this is the real free site).  Another source to check is, where you can get an estimate of your credit score for free (the site is sponsored by Quicken loans).  Keep good records, know what you’re paying and don’t rack up late fees by not paying attention.

About the author

Erin Baehr CFP®, EA

Financial Advice for Everyday Life

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  • Simply, amdlrabie what you have done here. It is pleasing to look you express from the heart and your clarity on this significant content can be easily looked. Remarkable post and will look forward to your future update.

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