Basic economic principles of business pertain equally in your personal life. Sounds pretty good but we so often hear about professionals who can’t seem to figure out their own finances. Life is not that complicated – If you spend more than you make sooner or later it will catch up with you.
Everyone needs a budget. List your income in one column and right next to it, list your expenses. If column one is greater than column two you have some money left over for saving, celebrating or buying a goodie. If column two is larger you need to cut back on some of your expenses. Warning: building credit card debt is expensive and stupid. A good financial rule of thumb: “if you can’t pay for it now don’t buy it” with the exception of a reasonable priced home and a good car.If you spend more than you make you will likely have increased stress in your life. When your employer finds that you are not personally financially responsible that may slow your career growth and you might not even realize it. Demonstrated financial responsibility in your personal and business practices speaks well of you as person and as a leader.
Joe, these are worthy guidelines in general but for some it is not enough. In our economy, getting sick can ruin you financially despite however good you may have been in lving within your means and planning for the future. For example, if your personal insurance premiums run over $30,000 per year (as one self-employed individual told me recently) and you still can't cover all your medical expenses due to complications from an inherited but previously well-managed disorder, then there are larger issues at play here than simply budgeting adequately. And there are plenty of other scenarios in which financial health has been ruined due to circumstances beyond the control of the individual (loss of job, etc.) in our current economic world.
Some compassion for individuals who are working hard to manage their own financial circumstances but run afoul of obstacles bigger than their own resources is called for. This speaks to how important it is for managers and leaders to know their employees on a personal basis as much as possible if the goal of the organization is to have a thriving and humane culture that supports a positive bottom line and a sustainable legacy in the community.