Minding My Own Business

I’d like to offer a warm welcome to readers joining us from the Carnival of Personal Finance #174 - The Columbus Day Edition, graciously hosted by Greener Pastures.  Here at Minding My Own Business we approach personal finance and money management from a leadership and business perspective.  Take some time to look around and check out the site.  If you like what you see, I encourage you to subscribe via RSS and add a link to us on your website.  I’ll gladly reciprocate on the blog roll.  Thanks for stopping by, I hope you enjoy your visit.

Back in August, I wrote a guest post for Free Money Finance that highlighted my perspective on how I handle and manage my money.  The concepts outlined in the article are important so I wanted to make sure they were covered here on Minding My Own Business as well.  I’ve updated the article since the FMF post to reflect some refinements of my views on managing money and to add more detail.

Minding your own business requires leadership, management and work.   Ultimately the leadership and management roles are where I’m striving to be when I deal with my money.

I hope you enjoy the article and that it provokes some thought and discussion about how you spend your time leading, managing and handling your own business.

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Handling your finances comes with myriad tasks.  You earn, you pay bills, you invest, you write checks, you plan, you, you, you….  I think you get the idea.  Handing the finances is a lot of work for you.

I view the tasks involved with handling finances as being divided into three distinct and different roles that are similar to what you find at work where you have worker bees/followers, managers and leaders.  I like to call these roles the Money Handler, the Money Manager and the Money Leader.

The Roles

Normally I like to think of and explain concepts from a top-down mentality.  However, when it comes to finances, so many of us are mired in the details of handling money, I think it will be easier to explain my perspectives starting at the bottom and working our way up.

The Money Handler gets his hands dirty doing the bits and pieces necessary to keep your financial vehicle running.  He changes the oil, adds wiper fluid, puts air in the tires, replaces light bulbs etc.  To quote an English friend of mine, the Money Handler “works at the coalface.”

From a personal finance perspective, Money Handler tasks include:

1. Paying bills - writing checks, stuffing envelopes and licking stamps.
2. Making investments - filling out paperwork, writing checks or making e-transfers.
3. Moving money - between accounts as necessary (e.g. on payday, etc.)
4. Reconciling accounts - balancing checking, savings, etc.

The Money Handler accomplishes the tasks necessary to implement financial plans.

Middle management is the responsibility of the Money Manager who helps develop financial plans and ensures the processes of money handling are running smoothly.  He has a broader view than the Handler and focuses on the route our financial vehicle will take when we drive it and monitors the systems within it along the way.

The Money Manger is thinking about which highway or streets can I take to avoid traffic?  How fast am I going?  Do I have enough fuel to get there?  How’s the car running?  When is the next scheduled engine maintenance?  Is there anything wrong with the car that needs to be fixed right now?  What kind of gas mileage are we getting?  Does the motor need a tune up?

From a personal finance perspective, Money Manger tasks include:

1. Developing financial plans to achieve your goals - Choosing investments, selecting insurance policies.
2. Guiding, monitoring and assessing the execution of financial plans - Things like monitoring earnings and expenses so you can create and maintain positive cash flow.

The Money Manager develops financial plans and monitors our performance executing the plan.  He seeks to improve the efficiency of the processes the Money Handler operates within.

The Money Leader is our business’ chief executive officer.  He provides the strategic leadership, vision, purpose and goals for our financial operations.  Continuing with our financial vehicle analogy, the Money Leader decides: Where are you going?  What stops along the way should we make?  When will we start our journey?

From a personal finance perspective, Money Leader tasks include:

1. Establishing vision - What is the end state we are trying to achieve?  Where are we going?
2. Developing financial strategy - How do we link our Financial Ends, Ways (plans) and Means (resources)?
3. Setting Goals that enable the strategy– This will drive many of the plans that are developed.
4. Provide guidance and direction to the Money Manager has he develops the financial plans  – necessary to ensure the plans achieve vision.

The Money Leader decides where you are going, when you need to get there and why you’re on this journey.

Each role is necessary in order to properly handle your finances.  However, the Management and Leadership roles are most important as they determine what success means and how you plan to achieve it.  I’ve often said that a “failure to plan is a sure fire plan for failure.”

Many of us get mired in the details of being the Money Handler and miss or fail to accomplish the bigger picture tasks of the Money Leader and the Money Manager.

Which roles are you performing?  Have you outsourced any?  Which are you missing?

-Jeff

I’m Leading and Managing My Money, are you leading money, managing money or handling money?