The short and long answer is YES.  You may be thinking why would I run my household like a business?  It’s simple, businesses are organized and operate as 1 unit.  They are cohesive and everyone within the business is working towards one goal, helping the business to win.

Like businesses, households can fall apart from mismanaged funds.

Here is my take on how businesses operate and how you can apply it to your household.

Businesses start with a Mission Statement. A mission statement is essentially the goal of the organization. 

Start with a Mission Statement

The first thing you need to do is set your financial mission statement. This will be the foundation that will drive the family’s actions. To develop your mission statement, you will need to Identify the goals and what’s important for the household.  Is the goal to be financially independent? Or is it to establish wealth to pass on to the next generation?  Whatever you decide, putting it in writing and making it visible for everyone to see is an important part of fulfilling the mission.

Businesses develop a strategy and plan that will help them fulfill the mission statement or achieve their goals.

Develop a Strategy & Plan

When developing a strategy and plan its important to consider the big picture.  Don’t just think about this month or this year, think longer term.  Businesses usually set multi-year plans and you should too.  Most goals will take longer than a year to achieve so it is important that your strategy and plan span multiple years.  Start with 5 years and then go from there.  Things may change and so focusing on the 5 years ahead is ideal.    

A budget will be an important part of the plan.  The budget will help to allocate the household income to your expenses and goals appropriately.  To make sure they are staying on course, businesses track their expenses and you should too.  Tracking expenses quickly identifies if things are going as planned and if any changes are needed.

It is not unheard of for businesses to hire outside consultants for their unique perspective or for their expertise.  Don’t be afraid to work with a finance professional when it comes to setting the household strategy and plan.

Businesses are centered around teamwork.

Teamwork

Teamwork is critical in helping businesses achieve their goals.  Everyone has a role and all of the roles together help the business succeed. Everyone in the household should have a role when it comes to achieving the household goals.  Maybe one person establishes the budget for say groceries and the other person may be responsible for grocery shopping and staying within the budget.  It’s also a great for children to be involved and have a role.  Maybe their role is to vote on a family trip and an activity to do on the trip.  Determining the cost of the activity and helping them to contribute to saving for it helps them to understand what is available when you actually take the trip.

Teamwork helps to establish a routine and builds in the opportunity for consensus decision making.  Research has shown that members participate more fully if they are part of the decision-making process.   

Businesses evaluate their progress often.

Evaluate Progress

Businesses often review their progress against budget monthly, it helps them to identify if they are going to achieve their goals for the year.  Within the household establishing a weekly or monthly meeting to discuss progress is recommended.  It keeps the goals at the forefront, helps to identify what’s working and what isn’t and provides the opportunity to change course if needed. 

Businesses are organized.

Organization

Being organized throughout the process is key for success.  Holding regular meetings, budgeting consistently and storing important financial documents should all be part of the process, so everyone is aware of what is going on.  Whether you choose to store important files physically or digitally, the important part is that the household members know where those files are should an emergency arise.

You can also check out my video on Running Your Household Like a Business. 

Are you or have you considered running your household like a business?  Let me know in the comments.