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Family Finance: It's A Business

If achieving your financial goals while avoiding marital spats about money sounds impossible, think again.

Author Mary Claire Allvine outlines a plan that leads couples down the path to financial security and harmony in her book, "The Family CFO, The Couple's Business Plan for Love and Money."

Although there are plenty of books and experts offering advice on this topic, Allvine feels that her book is different because it provides a rational, step-by-step plan for reaching financial goals and achieving financial harmony.

She tells The Early Show co-anchor Hannah Storm, "The fundamental idea in our book is to treat your family like a business. This is an insight I came to from my private practice, working with wealthy families on their finances. I think the missing piece in everyday couples who need to get through their dreams of buying a home, retiring, having a child, getting out of debt, they need to start thinking about their families like a business."

The plan may include assigning a "cash manager" and an "investment manager." It also means devising a business plan, holding regular business meetings to monitor progress, and using financial terms like "cash flow statement" instead of "budget" or "net worth projection" instead of asking, "how much money will we have?"

Allvine notes, "You take it as far as the metaphor goes for you. But the initial idea in using the business metaphor is that businesses are groups of organized, energetic, enthusiastic, emotional people who get to objectives. And families need to go back and focus on where are we trying to go. Money is only a tool, as it is in business, for getting where you want to go, to some of those dreams that I described."

Read an excerpt from her book. Here are some steps couples should take to begin thinking like a business:

Define Your Business - Set Priorities
What kind of business are you in? What do you want to do? Allvine has met many couples who simply don't set any goals for themselves. They don't discuss what they want from life and thus wind up living day-to-day, check-to-check.

"Managing your money wisely means having a clear vision of 1) what you want to do ... and then 2) what you need to get there," Allvine writes. "Most couples get this backward; they focus on financial assets (what they have) to the exclusion of their real goals (what they want to do), which makes it impossible to make wise financial decisions. Only by thinking about your life goals can you really make your money work for you."

Allvine points out that many of the fights couples have revolve around money priorities - either not communicating priorities clearly or not setting appropriate priorities in the first place.

She notes, "Couples when they are dating, before they decided to commit to a life together, they're always talking about their next dream. They get married; they move in together, you know what they talk about? You spend too much; how are we going to pay the mortgage? You can't change jobs. It becomes very negative, non-strategic picture. Go back to those dreams. Spend the time there working through those values."

Assign Job Responsibilities
Every employee in a business has a clearly defined role. Completing their job insures that the company runs smoothly. Couples need a similar organizational structure.

"Many couples don't define their responsibilities or assign important duties, and as a result only tasks with immediate, external deadlines get done," Allvine writes. "Couples like this eventually pay bills and taxes, but they put off strategic investments, overlook investment opportunities, and ultimately waste money.

"To thrive as a family, you and your partner need to assign and complete key financial tasks."

Keep Your Board Small
It's interesting to note that Allvine believes a family's business should only be run by two people: husband and wife. Grandma and Uncle Joe certainly don't belong in the mix, but even a financial planner or adviser should not sit on your board and help set your financial priorities. While you may choose to "outsource" some financial tasks or ask for advice on taxes and investments, nobody but the two of you can determine your life dreams.

This said - Allvine is a big proponent of launching a "best practices survey." She suggests talking to couples you admire and respect - especially older couples - to see what financial strategies work for them. Many of the couples she has met received some of their best advice, like start saving for retirement during your first job, or buy a home instead of renting, from family and friends. The folks you approach will probably be flattered that you're asking their advice. However, do be careful about advice from amateurs.

Allvine says, "What we have found, when couples truly get their money working for them, they get back to those dreams. You're back in sync with why you got together as a couple. Amazing the quality of your life improving." And she writes about it in the final chapter of her book, "Better Sex Through Financial Management."

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