Essential Management Skills (1)

Do you know the most important business in the world? Do you know its name? In the generic form it is “You, Inc.” For the specific name you must reveal the identity yourself by substituting your own name for the “You.” Recognizing this business is the key to successful personal money management.

Discover “You, Inc”.

If you haven’t heard about this way of looking at your life, now is the time to get acquainted with the You, Inc. principle. If you have, or if you haven’t, now is a good time to explore more precisely what it means to do so. Simply put, when applied to our immediate field of interest the You Inc. principle means applying the fourth essential law of success with money, the law of management.

Asserting control over our financial lives requires us to manage our personal finances as we would those of any important business, utilizing basic management skills such as goal setting, planning, organizing, record keeping, allocating resources, evaluating, and decision making.

If you were, or are, the financial manager of a large corporation you would have no trouble remembering that your first obligation is to assure the health and prosperity of your company. That’s what money management is all about.

A nice facility is, well, nice. But a positive cash flow is essential. Owning state of the art computer and communications equipment can be terrific, but generating sales (income) is essential. Having vehicles for transportation and deliveries can be important, but maintaining them in operational condition and preserving their value is just as vital.

Only you are in a position to be your own personal financial manager, the president or CEO of your own You Inc.

In our personal lives the pivotal question is, “If you do not look after your own financial intersts, who will?” And, of course, the answer is, “No one will.” Only you are in a position to be your own personal financial manager, the president or CEO of your own You Inc.

The fact is that there are many people, some honest and some not so honest, whose own self-focused interests may be at odds with your interests. If you do not take seriously your responsibility to look after your own financial needs you are not only at risk of not doing well, you are at risk of real disaster.

In dealing with many money issues I am able to tell you that what is required is not difficult or time consuming but mostly requires an honest commitment and a few simple steps of implementation. While not extensive, it is also true that in this case at least, some real work and time commitment are required.

The good news, however, is that developing even elementary skills in each area we will look at can produce dramatic results and that these practices can be developed further over time with increasing value. Even more exciting in my opinion is the fact that every area of life is enhanced as we learn to apply these principles, not just our finances.

There are at least seven specific skills that individuals need to develop to become a successful financial manager of this, the most important business in the world, You, Inc. The first four are: goal setting, planning, organization, and record keeping. I will discuss them in this article (part one) and the other three skills in part two.

As you can see these money management skills are all very practical and obvious ones at that for any money manager. But obvious does not mean well understood in their application to personal money management. They are each worth some careful thought.

Money Management Skill #1:
Clear Goals

Paul J. Meyer, one of the most influential contributors to the field of personal development, has focused much of his teaching on goal setting. In his book, 24 Keys That Bring Complete Success, he writes:

Goal setting is the most important aspect of all improvement and personal development plans…If I’m not making the progress I would like to make and am capable of making, it is simply because my goals are not clearly defined.

There are many good sources for learning goal setting skills and it is important to study the subject, but the most important quality of a life-directing goal is the one emphasized by Paul Meyer, an effective goal must be precise, specific, clearly defined. Learn to set out clear financial goals and they will be more easily attained.

What are your goals in the area of money? Do you have specific earning goals? Do you have specific savings goals? Do you have specific goals for improving your marketable skills? What are your short term and long term goals in each of these areas?

Once you begin gathering specific information and making serious plans there is little to stop you. That’s the way goals work.

Think about your life over the past few years. What happened to you once you started thinking about getting a new car? a new house or apartment? or a new job? Once even a general goal begins to form in your mind you begin moving in that direction. And once you begin gathering specific information and making serious plans there is little to stop you. That’s the way goals work. And once you begin to formulate serious financial goals it will be the same.

In the area of goal setting and in each of the other money management areas we will discuss there are two separate considerations for you to explore.

  1. Think about how you will go about developing better skills.
  2. Think about how you can apply these skills in your own personal life.

Personally I have literally spent thousands of dollars profitably on books and programs to help in these areas, especially on goal setting, business management, and personal development. Fortunately you can now get great help with money management skills at little expense online.

Learn how to google well. In many cases I recommend using the advanced features and setting the domain to .edu or .gov for more authoritative, independent information. This is easy to do. Just put “.edu:” or “.gov:” in front of your search term (be careful to leave no space between the colon and first letter of the search term or it will not work).

Don’t assume that you know all you need to know about goal setting. There are specific skills required to write goals that will effectively move you in the direction you want to go. In each of the areas we discuss I suggest spending at least as much time learning about money management skills as on applying them. It will pay off.

Money Management Skill #2:
Precise Planning

Planning follows goal setting. And like goal setting, good planning skills make use of many important techniques. There are numerous ways to achieve most financial goals and good planning helps you choose the best approach. Most of your plans will involve a number of common steps including:

  1. Define clearly the exact task to be accomplished
  2. Determine the resources (including money) needed
  3. Divide a task into manageable steps
  4. Arrange these steps into proper order
  5. Assign responsibility for individual steps
  6. Set deadlines

Other steps may also be required in a good plan depending on the project, but these are almost always required. Continue to study these skills over time for the best results. As president and CEO of You, Inc. you want and need to be a great financial manager, especially in the area of planning.

Don’t make the mistake of getting comfortable with one format for planning and using it all the time. For effective money management you need to learn and employ a variety of approaches.

For example, a reasonably extensive and careful approach needs to be taken when planning how you will go about buying insurance. There are many forms and purposes for insurance, some of which are a complete waste of money and some of which are essential. And, there are lots of choices within each category.

Choose an appropriate planning method for each goal, but always plan.

At other times, and on different subjects, planning may require no more than jotting down a quick “to do” list. Choose an appropriate planning method for each goal, but always plan.

Once again I would like to reference Paul J. Meyer. One of the most valuable points I learned from his goal setting programs that I don’t remember seeing so clearly identified elsewhere is this. After you have written out your plans and have considered all the investment of time and money involved, ask yourself this very personal question: “Is it worth it to me?”

More than once I have decided that my answer was a negative one. Many times we live with regret about something we have not done, but if we have eliminated something by choice after considering the cost we eliminate the regret and go on to better choices.

Money Management Skill #3:

How many times have you heard someone lament about their lack of organization and vow to make improvements? I admit that I have never managed to become as well organized as I would like to be. Yet I have devoted a good bit of time to it and I know I do better than most.

At one point I even taught training sessions on the topic of getting more work done through small groups, with organizational skills being an important part of the curriculum. But like most of us, I always keep thinking that the time I spend organizing my work is at the expense of time doing the work.

Proper organization is one of the best ways to reduce the amount of work required.

Of course the fact is that both you and I, as expert financial managers, know that proper organization is one of the best ways to reduce the amount of work required. When done properly good organization doesn't really take time, it makes time.

This is especially true when it comes to financial management. If you have to hunt here and there to find your checkbook or bank statements, if you cannot find statements for bills that may or may not be due, or if you have to sort through a big stack of papers to find a name or address, you can lose a lot of time.

If poor organization results in a late payment you may end up with exorbitant late fees and in some cases poor credit and higher interest or insurance payments. Yes, even things like car insurance rates are determined by your credit ratings!

There are a few basic requirements for good organization. You can make a longer list for yourself and with a little research learn some more advanced techniques. The important thing is just to do them!

  1. Have one place to keep all your records.
  2. Use file folders to keep each account separate from others (never put three or four accounts into the same folder).
  3. Use dividers to organize folders by groups (bank accounts, utilities, etc.).
  4. Always put new statements either to the front or back, which ever order you prefer, but never just stuffed in without attention to placement.
  5. Handle paper once. When you open the envelope decide on one of three actions: throw in the trash, file, or answer. If it is a bill you need to pay then pay it, mark it paid including a check number and immediately put it into the proper file.

Start with these and you will be well on your way to becoming a well organized financial manager. Remember that keeping up is easier than catching up.

Some organization will grow out of a special context. For example, many older people like to invest their savings in more secure investments like CD’s. In this case you need to organize your CD’s carefully because of varying expiration dates (and limited time to cash them without possibly negative consequences).

small logo Organize your CD’s

In order to get the best rates on CD’s the length to maturity may vary greatly from month to month as you buy new ones. In this case you may want to file them in envelopes with purchase information including maturity date on the outside of the envelope and stack them in your safe or bank box with the closest maturity date on top.

This date is important to keep track of because you will have a limited time to redeem each one without them being automatically renewed, perhaps for a long time period at a low rate.

By following this organizational plan you can easily see the next renewal date. You could achieve the same goal using a spreadsheet but this plan has the added advantage of having each CD ready to take into the bank as it matures.

Be flexible as you organize your financial activities and keep each element as simple as possible. As president and CEO of You, Inc. you have absolute authority to choose the best organizational procedures for your own money management needs, and all else being equal, simple is best.

Money Management Skill #4:
Record Keeping

Record keeping is an obvious necessity. Most of the records you need to keep you already keep anyway, motivation contributed unceremoniously by the IRS and associated state and local tax authorities. Nevertheless, there are some additional points to consider.

One looks back to the previous discussion of organization. Records are not useful if not available when needed. Be sure that you organize your record keeping as recommended. Likewise, keep your files up to date. Tax filing looks back to last year but you need to be focused on today and projecting for tomorrow. This means you need your financial records kept up to date and easy to access at all times.

A good financial management practice is to prepare a personal net worth statement each month. Individuals rarely take time to prepare these statements but as president of You, Inc. you will want to make a commitment to do it regularly.

There are certain records that you need for your own use that you might not ever share with others. A good financial management practice is to prepare a personal net worth statement each month.

Businesses know how important this is because over time it is possibly the best indication of business health. Individuals rarely take time to prepare these statements but as president of You, Inc. you will want to make a commitment to do it regularly.

While any one net worth statement gives a snapshot of where you are financially at that time, once you have several months or years of records to look at you can see the trends of your financial progress or lack thereof. Often, being able to see an average growth over several months gives a better picture of your financial health than changes over a short span of one or two months where major expenses or income can distort the picture.

Not long ago I had a personal experience that shows how this information provides data that brings reality into focus. Sometimes it shows different facts than we imagine to be true.

One month I had an unusual number of rather large outgoing expenses. In my mind I imagined the unimaginable situation of a loss in net worth for the month. But when all the numbers were tallied, some unusual increases in asset values completely offset the expenses and I maintained my record of consistent, if sometimes slight, improvements in net worth.

Boy, was I relieved. Could I have survived a one time loss? Sure. But one of my goals is to maintain a constantly rising net worth. As one of the signs in my office reads, “Happiness is a Positive Cash Flow!


The number one rule for writers is not to be dull. I have to admit that I approached this article with some concern. Goal setting has a potential for being interesting for some people I suspect, but planning, organizing, and record keeping? They all sound like no more than a lot of work.

Still they are essential subjects for anyone wanting to become successful with money and that is our focus. So intriguing or not, please don’t neglect them. The most important business in the world, You, Inc., requires effective money management and all of these money management skills are essential for ultimate success with money.

Continue to The You Inc. Principle, Part 2