Napolitano looks at money.
When it comes to your financial life, it really is like a small business of its own. Your finances have income, expenses, risks, taxes, assets and liabilities. There are some things that you can control and others you can’t, but this wide array of moving parts needs to be treated like any well-run business.
It starts with having a mission or purpose. If you would wake up and do it all over again tomorrow, then maybe this advice isn’t for you. But, if your mission includes a plan to make the most of your time on earth, that requires some sort of financial engine, with planning and management as you enjoy the ride.
Great businesses have a business plan. That plan talks about what the entity does, who can benefit from that product or service and then creates the strategy to attract and retain their customers. The business operator then lays out the day to day tactics needed to deliver on the strategy objective.
The strategy will change, or adapt to changing circumstances in the marketplace. Issues like interest rates, inflation, the economy, regulation and taxation will never stay the same and material changes in those or a host of other items may dictate that it is time for a change. This business owner has either a staff of professionals to help or arrangements with outside service providers to ensure that the needed expertise is called upon at the right time.
As we pivot to your personal finances, thinking about your situation as a business owner helps. Start by defining your purpose. Be as philosophical as you’d like, but I’m talking about your financial mission and purpose. Issues like planning a date for your financial independence so work is optional, understanding the math of what’s needed to put your family in the world you want to be in now and forever.
Then examine that strategy in light of the moving parts that are applicable to you. Ironically, many are similar to those of a business … inflation, taxation, cash flow, the economy, risk management, etc. And just like a business owner, you’re not likely to have the overall knowledge needed to properly assess and plan for some of the major moving parts. So to that end, you may need an accountant, financial planner, attorney, risk professional and others to carry out your mission.
The advantage still goes to the business in probability terms of getting it right and preventing things from falling through the cracks. Why? Because the employees or outside consultants to the business meet often and have significant contact with the leader of that business. They consider their subject matter expertise in the context of other material issues and employees aren’t allowed to stick to their silo of expertise without interacting with other disciplines.
For your personal finances, either be the CEO or get someone to do it. Not attending to these important matters in a cooperative way may cause significant, irreversible damage.