Become your family CEO

Think of your family as a business.
Your family is your personal corporation that makes sales (your work income), has operating expenses (bills), and needs to make a profit (savings and retirement). If you want your corporation to make money, you can do some of the same things a CEO does.

Periodic expenses
As CEO you should identify expenses that happen once or twice a year: Auto and home insurance, car maintenance and repairs, property tax, or anything over $400 to $500 that occurs regularly. Add them up and divide by 12. This is what you have to save every month to not come up short. Set up a simple transfer to a savings account.

Discretionary spending
Next, total up last year’s spending by category: Groceries, utilities, phones, maintenance, clothing, dining out. Spreadsheets or checking apps make this fairly easy to keep up with.
Some of that spending is discretionary; things you want instead of actually need. Some things are going to fall a little bit in both categories.

Make big decisions; set limits
Compare income and expenses. If you spend more than you earn, it’s time to put on the CEO hat. Look at discretionary expenses. This is where you can cut spending. Set limits here.
Do you really need a new company car? You can save $300 to $800 a month if you stick with the old one. (Think about how much that adds up to if you keep the car for 10 years! Even with annual repairs, you come out way ahead.)

Think big picture
As CEO you want to focus on the big picture. Don’t make the process too complicated. Maybe for a month — as an experiment — save all your grocery receipts and then analyze expenses as wants or needs. But, too much detail will probably make you want to quit. Stay big picture. If you’re spending within limits, then the plan is working.

Appoint a CFO
Having established spending guidelines for the year, appoint a CFO to make sure bills are paid and spending is within limits. If that is your spouse, and not you, then make sure your partner understands the plan and is on board. Hold a monthly board meeting. Tweak your plan as needed.