Imagine this scenario. In your twenties you work for a small start-up company. You work your way up the ladder as the company grows. In addition to salary increases you collect more and more stock options, too. Then, just as you turn 30 your company sells — making you incredibly wealthy in the process. So wealthy, in fact, that you decide to retire! Whoo-hoo!

That’s what happened to author Kim Snider… but the story didn’t end there. At the time Kim didn’t know much about managing personal finance. So, like many others she took her money and gave it to a large investment bank to manage on her behalf.

And within two years the entire portfolio was completely gone!

That’s when a lot of people would have rolled up into a ball. Kim, however, decided she needed to learn everything she could about personal finance. Today she urges people to consider an alternative to the “asset accumulation” model. This common model assumes that what you invest in today (stocks, homes, etc.) will increase in value. Eventually, says this logic, you can sell your investments for retirement income.

Instead, Kim advocates building a lifetime of cash flow (using options). However, this is a more advanced strategy. So, Kim wrote an excellent beginners book called “How to Be the Family CFO: 4 Simple Steps to Put Your Financial House in Order”.

I think everyone would benefit from the basics outlined in this book. Snider goes into each step in detail. Here are the broad steps:

Step 1: Be the Family CFO

Step 2: Plan Prudently

Step 3: Save Prodigiously

Step 4: Invest Wisely

This book stresses some critical fundamentals. One of the biggest is that only you can take responsibility for your financial situation. Here’s a quote that resonated with me (page 124):

Some folks have credit card debt up to their eyeballs, and they want someone to figure out a way to get them out — preferably a painless way in which they don’t have to give up anything. Some folks haven’t saved enough for retirement, and now with ten years to go before retiring, they are looking for a professional with infinite wisdom and knowledge who can make up for the shortfall of the last 20 years by pulling a rabbit out of a hat.

So, as the saying goes, “The best time to plant a tree was 20 years ago. The next best time to plant a tree is today.” Use this book as a foundation for personal finance learning. Small actions you take today will add up over time. Start your education today and you’ll be able to rightfully hold your the title of Family Chief Financial Officer.

Related articles

• Your Personal Cash Flow Statement (geezeo.com)

Further Reading

• Move On With Your Financial Life Through Giving (0)
• Blogger Focus : Always The Planner (0)
• How to Rebalance Your 401k (0)
• Learn to Paper Trade – For Free! (0)
• Four Ways to Legally Clear Credit Card Debt (3)

Tags: Business, Cash flow, Chief financial officer, Finance, home, Investing, Investment, Investment banking, Option, Personal finance

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