Wednesday, February 14, 2007

Your Own Personal Board of Directors

Imagine yourself as the CEO of your own company. As CEO you will have various people who work for you such as a V.P. of Finance, V.P. of Information Technology, V.P. of Legal Counsel, V.P. of Marketing, etc. Each of these members of your staff serve an important role in advising you and guiding the company. Their past experience in the specialty areas uniquely equips them to provide this guidance on proper management of the company.

This analogy can very accurately be transferred to your own personal finances. You are the CEO of Me, Inc. Regardless of whether or not you work for someone else, ultimately, you are your own boss when it comes to financial matters. Similarly to the executive team of a company an individual should arrange a "board of directors" for their own personal finances.

This team of individuals may consist of an accountant, a lawyer, an insurance agent, a banker, and a financial planner. Each of these are important areas in which to have solid financial advice. While one may believe themself to be intelligent and of the do-it-yourself mindset, it is important to consider that these professionals have experience in the specific areas in question and that the money spent will likely be well worth it. This is of course provided that you do some shopping around for good references.

Your personal board of directors will provide advice in a variety of financial and life issues that you may encounter. Some people within these areas may already be within your present group of friends and family. If so, that is great but be careful to remain as objective as possible in business matters and make certain that they explain things in a simple to understand manner. You want to learn and become more savvy financially as life progresses. Those with "the heart of a teacher" as Dave Ramsey says, are most ideal.

The board members will create a sound structure for you whether you have basic dealings or more complex financial transactions. Solomon the wise said it best, "Plans fail for lack of counsel, but with many advisers they succeed." -Proverbs 15:22

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