We're Not So Different, Corporations And I

Image from realizedworth.com

I got a big wake-up call while going through my education in finance. Individuals are, in many ways, companies. Companies have financial statements and individuals have personal financial statements. Since I've learned how to analyze financial statements, it's frightening to know that I'm worth very little and I'm not an attractive "company". Damn you finance degree! I know now that I have not been managing myself very well. I've not been investing in myself and increasing the value of Me LLC/Inc.

There are two personal financial statements:

1. Balance sheet is your assets and liability. What you own and owe, showing what you're worth.
2. Statement of cash flow is your inflow of cash minus outflow

Companies have income statements, but since companies revenues are from sales of product/service and most individuals revenues are wages, a personal cash flow statement and personal income statement would look very similar. Basically, it is the realization of how we carried out our spending plan/budget.

Step 4 in moving toward financial wellness is making the decision that YOU are the Chief Financial Officer of YOU LLC/Inc.

The responsibilities of a family CFO are:

1. Planning and creating goals to prepare the family for future conditions. 
2. Presenting, and reporting of accurate financial statements.

If you are married, a board (family) meeting should be conducted and simply explained (to spouse and children) on what actions are necessary to meet financial goals. Empower your children by asking their help on making a snazzy powerpoint presentation and even opinions on what the family can do to meet goals. Of course, transparency is very important, you can't hide your spending from your kids!

What we can take from step 4 is that, in the end, we are responsible for our wealth. Our actions today affects our financial future. Believe in tomorrow and the future.

Whoever disbelieves - upon him is [the consequence of] his disbelief. And whoever does righteousness - they are for themselves preparing,

30. Surat Ar-Rūm (The Romans; 44)