Financial leadership

Lately, we have found out that there are many companies cutting it very close to financial problems. Obviously the senior management was unable to keep themselves prepared for hard times. I often wonder what the personal finances look like of the executives who run companies that are living so close to the financial edge. These stories are a good reminder that there are basic money management principles that apply to both individuals and companies alike.

Everyone who is responsible for a budget, whether it is the family budget or the corporate budget, should oversee that budget with the understanding that there will bad times when income is lower, costs are higher, or unforeseen circumstances happen. In each case the prudent budget overseer is prepared.

You may have heard the old money management concept “live within your means”. I would tell you to got a little further. Live under your means. That means put some away for emergencies and opportunities. You WILL have an emergency sooner or later. Something is going to break or go missing. Example – the company you work for reduces your work week from 40 to 32 hours thus cutting your pay by 20%. You will need money to deal with that emergency. Opportunities WILL come your way. Someone will offer you a great deal that will save you money if you can purchase right away. You will need money in order to take advantage of this opportunity. Example – the cost of each share in your 401k retirement account has dropped by 20% thus giving you an opportunity to buy even more shares at this great discount rate.

Part of budgeting is realizing that a “rainy day” or a “lucky day” will come your way eventually. Not preparing for that could put your in financial ruin, just like so many companies we have seen in the news recently. Living under your means and setting aside resources for those out of the ordinary circumstances will give you financial stability during hard times.
Be sure to use this website to learn more about saving money and cutting costs thus allowing you to live under your means!

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