This week, I’m going to be talking to Roger Whitney, a financial planner from the US known as the Retirement Answer Man. He blogs and podcasts over at rogerwhitney.com. We’re going to be looking at four steps to run your personal finances like a business.

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Introduction

The best-run businesses are tight ships. Their managers keep a close eye on cost-saving, increasing the income and finding operational efficiencies. But in my experience I have met white a few business owners whose personal finances are in chaos. Today I want to see which lessons form good business management can translate into personal finances, and Roger Whitney is going to help me do that. I really enjoyed chatting to Roger, and though we had never spoken before, it becomes clear that we’re driven by a similar desire to help ordinary people understand their finances better – so I hope that comes across.

Four steps to running your personal finances like a business

Before getting to the four steps, the first thing to know is that you should stop trying to plan for the long-term. The future in business, your life and in markets is unknowable. Focus on making systematic smart decisions by (and here are the four steps):

Step 1. Establish one year, three year, and long term priorities (dream about the long-term but don’t plan it out)

Step 2. Create free cash flow. Focus on improving your income (revenue) and controlling your lifestyle (overhead)

Step 3. Review your financial statement and deploy your current assets and free cash flow based on your stated objectives

Step 4. Review and adjust as your life unfolds (review everything every six months)

Summary

If we can all apply these lessons to our personal finances, then we will definitely win big. I think it’s fascinating that the ‘secrets’ of the big corporations are just as applicable to each of us personally. What do you think? Roger is a dude for sure, and I really enjoyed chatting to him. Big thanks to him for joining me this week. Do check him out at rogerwhitney.com and maybe drop him a line to say hi.

Next Session Announcement

Next time we'll be talking about Net Worth: Defining it, Building it, Protecting it.

I’ve been asked to cover the topic of Net Worth several times by listeners, so I’m looking forward to meeting that need. See, it does work when you ask me to cover stuff; some of the time at least! So if you have a question on this subject, or any other financial query that you want answering here on the show, then the best way to do that is to leave me a voicemail at meaningfulmoney.tv/askpete

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