How to Manage Your Money Like a Boss (Happy National Boss’s Day)
Today is National Boss’s Day. Go ahead and kick your feet up on your desk and enjoy your coffee, you’ve earned it, Boss. Wait, you’re telling me you’re not a boss? You don’t manage anyone or anything? You’re not the El Jeffe, Queen Bee, or Head Honcho of your office? Well, neither do I. Nobody is taking me out to Applebee’s for an office lunch today or buying me a frosting inscribed “World’s Best Boss” cookie cake. I may not manage people, but I manage my money – like a boss. Here’s how you can too.
Have Plans, Not Just Dreams
Can’t help it, I’m a sucker for a good quote. “It takes as much energy to wish as it does to plan”. Amen to that. You don’t just dream of buying a home, paying off your student loans early, getting that promotion you want or retiring early. You don’t dream about it because you’re actively planning for it. You’ve got goals and you’ve got plans. Set your goal and create a step-by-step, weekly, monthly, and yearly plan and make it happen.
Nobody likes a micromanager, especially your money. Know where you put your money and then have the peace of mind that it’s doing what you told it to do. Set-up automatic payments, spending alerts, and have statements e-mailed to you for review. Just like a good leader, when you don’t micromanage, it frees up time for you. Spend this new found time focusing on your money strategy and goals.
Focus on Small Wins
Rome wasn’t built in a day and your mortgage isn’t going to get paid off overnight either. Big financial goals take time, planning, and dedication. The first time I took out a 30 year mortgage, it sickened me to think about how much I was going to pay in interested, not to mention that when I finally paid off my house I’d be 30 years older. Sigh. Instead I focused on trying to make additional principle payments when possible and keeping my eyes peeled for the best re-financing offers. Now, 11 years into our first 30 year mortgage our house is paid off. It didn’t happen overnight. It happened when I finally got serious an created a plan with milestone on how we could pay off our mortgage early.
Know Your P&L
Like any successful manger, you understand your P&L or Profit & Loss report. A P&L the high level report that shows a manger in general terms their bottom line. It’s revenue minus expenses and hopefully it nets to a profit, not a loss. Every month you should know how much money you’re bringing in, what you’re spending it on, what you have leftover, and then finally, what you do with the (hopefully) profit. Give every dollar a place in your budget whether it’s for savings, investments or expenses.
Know Who Your Money Works For
Does your money work for you, or does it work for your banks, lenders, and brokers? It will be a cold day in hell before I pay an ATM fee, credit card fee, or interest on my credit card. That’s just silly. Why give your money away to someone when you don’t have to? I’ve done my homework on where I can find the lowest expense rations or commissions when I invest my money. Your money should always be working for you first.
Don’t Pretend to Know It All
Have you ever heard “fake it till you make it”? As a money boss, I don’t play that game. When I don’t understand something financially, I don’t just ignore it and pretend I understand. I seek the answer myself either by doing my own research or finding professional help. You don’t have to be an expert at everything. Next time you’re buying a new house or car, trying to figure out your TSP or doing your taxes, if you don’t understand something, ask for help. If I’m going to sign my name to something and spend my money on it, I want to 100% understand what I’m doing.
Stay Cool under Pressure
Crises happen and sometimes you just can’t prevent them, but a good money boss knows how to be prepared for them. You have your most valuable assets insured – you and your family. Whether it’s medical or life insurance, you should know how much coverage you need and you don’t let it lapse. The same goes for your tangible assets. Home, auto, rental, whatever you need, you maintain the coverage you need to protect your assets. Likewise, you keep up a plump emergency fund for unexpected costs that hit your budget. Spending out of your emergency fund is never fun, but at least you’re covered and you don’t have to financially sweat it when something terrible goes down.
Are you already managing your moolah like a boss? Or do you have some financial personal development to do? Whatever the case may be, don’t forget to wish your boss a “Happy Boss’s Day” today and pick up the check at lunch.