Personal Finance Management: Yourself Are Your Business

What many people forget when looking at personal finance management is that it isn't simply a case of investing funds for the future. It also means looking at yourself as a corporation. Do your investments work for your betterment?

It's easiest when you think of yourself as your own personal CEO and picture out where all your investments are going. That way, you can handle your money less emotionally and with more impersonally.

For example, do you go around thinking, “I deserve this so I'm going to buy it even if I have to cut down on other things?” Take a look at Wall Street and study the CEOs who had huge slush funds. These are illicit purchases at the very best, since they really don't do anything to better you and they aren't necessary. So the question now becomes, “What happened to all of those CEOs? Do I want that to happen to me?”

Next, is your accounting and bookkeeping department in order? You should have a running balance telling you if you're in the red or in the black. If you don't know, that's bad finance practice. You need to get your books in order, stat.

Once you know how much extra money you have, then take your R&D department and find out where to put it to make the best returns for you. Don't automatically go for the investments with the highest interest rates; you should be highly suspicious of these. Instead, look for those financial instruments which have kept a steady rate for the past few years. It's much better if they've been steadily rising, of course.

Once you've made good returns on the dollar, then you can write yourself a check for the dividends you've earned. NOW, you can really say you deserve it.