Tuesday, May 11, 2010

Family Office Manager: Does your family have one?

A couple of years ago I read, Thomas J. Stanley's Millionaire Women Next Door: The Many Journeys of Successful American Businesswomen, and I had one of Oprah's aha moments. Chapter 17 is called "Why not run the family office?". He wrote about Susan, who handled all of the financial issues in her home, such as budgeting and making investment decisions. She treated her role like a job and helped her family achieve financial independence. I could relate to Susan and it has become my mission to emulate her success. If you get a chance, find this book at your library and read it and this chapter.

After reading about Susan, I realized that my role in our family is not just of a wife, mother, and home-keeper, but also the Family Office Manager. We would like to become debt-free and financially independent. These things don't just happen on their own. It takes planning, research and time to manage a home office. In our marriage, I handle the finances. I have an interest in the topic of personal finance and my husband would rather eat bugs than deal with this subject, so in our home I am the Family Office Manager.

(My office on a good day...)

I might manage the family finances, but we make all financial decisions together and I review everything with him. Last year, when my husband needed to purchase a laptop because his current one was on the verge of breaking into two pieces, he came to me to ask if we had the money for him to make the purchase. It was a necessary expense, but also an expensive one and neither one of us would ever make such a large purchase without consulting with the other person.

My husband does get involved with some financial activities; he did an amazing job negotiating the purchase of our last vehicle. He is actively involved with any major purchase, like a car, computer, or home improvement project. He enjoys researching those things and I would rather eat bugs.

What does a family office manager do and what are their responsibilities?

It will vary from home to home, but in our family, my responsibilities include:
  • Track spending vs. the budget.

  • Review budget. Where are we over-spending? How can I reduce the grocery budget? Do we have enough money for Christmas gifts? Where can we reduce spending so we can start saving for college funds?...on and on and on...

  • Reconcile all accounts: checking, savings.

  • Pay bills in a timely manner.

  • Manage and monitor our emergency savings & Health Savings Account.

  • Project short term cash needs.

  • Manage retirement planning: how much will we need? How can we reduce our fees, but increase our return? Research funds and asset allocation breakdown. Make sure we max our contributions.

  • Taxes: I work with an accountant because of our business taxes. I also make sure we take advantage of as many deductions as possible.

  • Monitor and reduce our liabilities: I am currently working on our 5 year debt-reduction plan. I am also in the process of refinancing our mortgage and car loan again. My hubby will come along to sign on the dotted line.

  • Prepare our Family Balance Sheet and review with my husband.

This arrangement works in our home and our marriage. In our home, the family office manager happens to be me, the wife, but it could be either partner. The key to success is trust, communication and organizational skills.

Does your family have an office manager?

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  1. We learned a long time ago the value of communicating well about all financial matters. Our responsibilities are divided pretty much the way yours are, although my husband also does all the retirement planning and investing. We have a meeting once a month to go over the past month and plan for the current one. That sure prevents a lot of surprises!

  2. It's wonderful how you and your husband work so well together on this. Your strengths balance out his weaknesses, and vice versa. Yeah!

  3. I call myself the CFO, the CEO, and the Executive in charge of EVERYTHING!

    I loved your comment that your hubby would rather eat bugs. Sounds like mine.....'


  4. You and your husband sound just like me and my husband! I "officially" handle the finances, but we talk about our money frequently and always consult each other before making serious purchases.

  5. Exactly how my husband and I do it. I would like to note that we are 28 and 26 married 4 years, with 2 girls[2 years and 2 months]. I control all the finances and he is out there bringing the money home. I am as he says The Warden of the house. Nothing gets past me without talking about it. We always talk about making any kind of large purchase [to us that is over $200].


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