Running a Household Like a Small Business

It sounds cold but really running a house is just like running a business. You probably know that, but do you generate an income statement, balance sheet, and a statement of cash flow? I don’t, but you know what, I should so I am going to start.

Personal finance and personal investing are related, if I do a better job of one then I have the funds to do the other.  I spend so much time analyzing different company’s financial statements maybe I should start eating my own dog food and give my own financial statements the same rigor. On the top line I understand my family’s income and the return from my portfolio but have I taken into account the time value of money? Nope. On the bottom line I understand my family’s expenses but are there opportunities to cut? Dunno.

Over the next few months I am going to start generating an income statement, balance sheet, and a statement of cash flow.  I hope that by doing this the following goals can be achieved:

1. I will get a better understanding of how these statements are made (and manipulated) which will certainly help with my investing.
2. I will be able to find some opportunities to increase the top line and decrease the bottom line so I can spend more in the investing field.

I am going to do everything in excel so I can share with you the templates as I go. If you are up for participating jump in and let me know about your own experiences.