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By Len Penzo
August 1, 2016
Close up of a supermarket shopping bill
Close up of a supermarket shopping bill
Brian Jackson—Getty Images/iStockphoto

Before I started up my blog, I spent my free time as a dedicated volunteer for Little League baseball. And although I rose through the ranks over the years to eventually become a league president, looking back, my fondest Little League memories still come from the time I spent managing my son’s tee-ball team.

My first “practice” was a pitiful failure. I was woefully disorganized and, as a result, the 5-year-olds got bored almost immediately. Before long, that practice session looked like something straight from Lord of the Flies; I had lost complete control, surrounded by a band of marauding boys who defiantly spent the rest of the hour kicking up the infield dirt and pulling the wings off moths in the outfield.

Needless to say, I made sure the rest of my practices were always well-organized.

Read More: My Son’s “Free” Car: What We’ve Got Here Is a Failure to Communicate

The Importance of Organizing Your Personal Finances

Organization is a means to an end. The truth is, organized people save more time and money than those who aren’t. When you’re organized, you become more efficient and that makes life much easier.

With respect to your personal finances, organization is what enables people to manage seemingly complex and/or enormous jobs such as tracking their income and outgo down to the last penny with relatively little effort.

The good news is, getting organized isn’t hard. In fact, all it takes is a little commitment and discipline — and I found that one of the best ways to get organized is to run your household like a business.

Read More: 21 Reasons Why Silver Is the World’s Second Most Useful Commodity

My Household Business Organizational Structure

In the grand scheme of things, a household is a business with real assets and liabilities. There are revenues, represented by our household income, and there are non-discretionary obligations such as the mortgage and utility bills. There are also discretionary costs in the form of entertainment, vacations, and other non-critical expenses that require careful analysis and smart decisions.

And just as any smart business works to efficiently manage and maximize its revenues, I too want to ensure that our household spending decisions always give us the most bang for my paycheck.

From the day we were married, the family finances have been jointly managed by the Honeybee and me. Each of us has separate responsibilities that are clearly defined, as shown in the handy dandy household organization chart below.

As you can see, it’s not very complicated; I act as the CEO, while she is the CFO. I know. But just play along.

I’ll now go into a little more detail for both our jobs.

Read More: How to Survive the Apocalypse (Or at Least Have Fun Trying)

My Duties as the Household CEO

As the CEO, I’m responsible for long-term and strategic financial planning decisions, including stuff like how much life, auto and home owner’s insurance to carry, retirement and investment contributions, emergency fund allocations, and future big-ticket discretionary spending. That requires me to evaluate all household expenses, both past and future, and then determine whether those expenses are discretionary or non-discretionary.

In short, my job consists of seven primary tasks:

  1. Identifying future household expenditures
  2. Categorizing those expenditures as either non-discretionary or discretionary (“needs” or “wants”)
  3. Developing a household strategic spending plan
  4. Establishing the household budget
  5. Ensuring my family understands the strategic spending plan and budget
  6. Ensuring the strategic spending plan and budget are faithfully adhered to
  7. Refining the strategic spending plan as necessary

My Wife’s Duties as the Household CFO

As the CFO, the Honeybee acts as the family’s financial manager. Essentially, in addition to handling day-to-day financial operations, she keeps her fingers on the family financial pulse, always aware of past and impending non-discretionary expenses, as well as any near-term discretionary spending considerations.

In a nutshell, here are her seven primary responsibilities:

  1. Establishing and maintaining our financial records and spreadsheets
  2. Ensuring all the bills are paid on time
  3. Actively tracking household expenses and income
  4. Identifying present and future household expenditures to support strategic planning
  5. Ensuring the strategic spending plan and budget are faithfully adhered to
  6. Ensuring the checking account is balanced each month
  7. Identifying negative financial trends and potential trouble areas

Summing It All Up

Running our household like a business has played a crucial role in ensuring that our family income has been used as efficiently as possible over the years. In fact, it’s been more successful than I ever imagined.

That being said, will the way we run our household work for everybody? That’s doubtful.

Has it worked perfectly for us? Of course not.

But it has instilled a strong sense of organization and financial discipline into our lives. And for most anyone who aspires to take control of their personal finances and achieve financial freedom, that is absolutely essential.

Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

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