In every family, one of the most important discussions is to appoint someone to take charge of the family finances. Being the CFO of Home Operations can be tricky, can definitely be demanding and can seem at times almost impossible.
Some people suggest you should run a family’s financial affairs in the same way you run a business. The family CFO needs
to create a plan and set goals, track monthly cash flow, review outgoings periodically to avoid overspending, and work with professionals hired to assist the family, such as lawyers and accountants.
Create a Mission Statement
Each family needs to understand what the family finances are all about, so the first thing every family needs is a MISSION STATEMENT. Yes, it may seem a little odd, but it is important to write down the financial goals of the family so a plan of action can be created.
Understanding Your Expenses
The most important job of the family CFO is to acquire a thorough understanding of the family expenses. Look at where the money is going and review your statements: you must determine what the family money is being spent on and forecast future expenses.
Hold Quarterly Board Meetings
The CFO must meet with the Vice President of Family Affairs (the spouse) and all employees (children) on a regular basis. The purpose of the meetings is to conduct a formal review of expenses, bank balances and investment performance and make sure everything is going according to plan. Each family meeting should have an agenda that reviews the family mission statement and budget.
Annual Bonuses
With most organizations, if the company has had a good year then it rewards its employees to thank them for all their hard work. The same principle should be applied to the family – bonuses and rewards should be based on not just the ideas and but also the implementation that has actually lowered expenses and saved money, helping the family reach its goal.
The reality is that successful businesses create business and action plans. At the end of the day, as a family we should all work together as a team and each be responsible for working towards the family’s financial goals.
Carla Seely is the Vice President of Pension and Investments at Freisenbruch-Meyer. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.
