How to be the family CFO

As acting chief financial officer of my family, Kim Snider's How to Be the Family CFO provided me with an education I wish I had received 15 years ago! The book is easily digestible, with five sections, and most chapters easily read in 5-10 minute bites. This proves to be the best way to read the book since it is packed with valuable information.

For anyone at the beginning of their financial education, How to Be the Family CFO provides a wealth of information. If you consider yourself financially savvy, there are still some wonderful reminders, and advice on how to maintain and grow your wealth.

About the Author

You may be wondering why you should take advice from the author, Kim Snider. As a mother of four, I was wondering that myself when I read that she was married without children. I wondered how she could speak to my concerns as a parent, but after reading the book I feel like she completely “gets it.” It helps that she has pets who seem like they must be her “kids” — she even set them up with their own trusts!

Snider shares her personal story in the introduction. At a young age, she sold her stock options from a successful Silicon Valley company and became a multi-millionaire. Within two years, Snider left her job, spent a good portion of her money, and lost the rest by entrusting it to her financial advisors without educating herself on the decisions they presented her with. She was broke, in debt, and had to start over.

Now, twelve years later, she's dug herself out of debt, created her own business, and shares her experience and knowledge with others through classes, seminars, a blog, and her book. With her spouse, she also runs a company called Snider Advisors.

Four Steps to Financial Success

Snider wants you to treat your personal finances with the same care and scrutiny a CFO would use in managing a corporation's bottom line. According to Snider, the family CFO uses three tools: planning, managing assets and liabilities, and managing behavior. These tools are taught within the context of her four steps:

  1. Plan prudently. Beginning with personal financial statements (one for income, one for balances), Snider wants you to examine where you're starting. Next she asks you to come up with a vision. She helps you break down your vision into categories and then specific goals using a noun, verb, and a date. An example is, “Pay off all debt, except mortgage, by January 1st, 2009.” Lastly Snider asks you to face the difficult task of planning for the inevitable.
  2. Save prodigiously. If you are financially savvy, you may already have these steps in place, but I'd venture that some of you are like me, just getting started on our road to financial freedom. Snider suggests setting up an emergency fund with six months expenses (not six months salary!), knowing the difference between good debt and bad debt, taking advantage of tax-deferred accounts (especially 401Ks), and saving for retirement before college.
  3. Invest wisely. Snider starts this section by asking, “What is your money's higher purpose?” She challenges you to aim big, and then asks you to refine your investment plan by having you assess your temperament, your horizon (how long you have to invest), and where you stand on the risk/reward continuum. There are additional chapters where Kim discusses starting early, taxes on investments, investing your money yourself, creating passive income, minding inflation, and remembering to stay the course.
  4. Manage risk. Managing risk starts with protecting your most valuable capital — you! In these chapters, the author discusses various types of insurance, identity theft, and maintaining your credit score. She touches on topics aren't often covered, such as long-term care insurance, medical identity theft, and protecting yourself from obsolescence.

Though these seem like financial common-sense, the author outlines the steps and gives advice on how to follow through. For instance, many of us know that we should plan our estate, but have you ever considered making a “What if…” file? Most of us know to keep a file where all our important documents are stored, but did you ever consider including in that file a copy of your home inventory, records of your pets' microchips, important phone numbers, or even family recipes? This is just one of the nuggets of info that Kim shares in her book.

Pros And Cons

The steps Snider lays out are overwhelming, and some of them may not be achievable, but her overall message is to make a plan and stick to it. I know it may take me years to complete all the tasks she laid out, but if I act on just a fraction of her advice I know I will will be in better shoes than before (maybe even designer shoes!).

The book's biggest downfall is the constant reminder of Snider's investment methods and her company. I understand that she has a business to run, but in my opinion, if I like the book and want more advice on investments, then it would be pretty simple to include a tidbit at the end of the book explaining what she does, and where I can get more info.

I also found the style and tone of the book a little “off”. Snider included quotes in the middle of pages, which broke up the reading in an odd way. I think she must have had so many favorite quotes she couldn't stop herself from including them. She also tried to convey a conversational tone, but sometimes it feels forced.

That said, I recommend this book to anyone who is the family CFO. Snider offers sound and solid advice, and gives you the steps to really get your finances in order.

For more on this subject, check out Flexo's awesome guest post from 2006: How to be the CFO of your own life.

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Trevor - 14 Year Old Blogger
Trevor - 14 Year Old Blogger
11 years ago

I love this post. Awesome. What a great metaphor.

RobertD
RobertD
11 years ago

I have read the book and it is not bad although I think there are some other books which are better. The Average Family’s Guide to Financial Freedom is one I would recommend, if people like the Tooheys can do it anyone can. Additional if you look at most CFOs you do not have anything to learn from them as many of them are leading their business enterprises to disaster. On the other hand those of us that are baby boomers can often remember, grandparents or great grandparents that really knew how to live frugally and within a budget. Looking… Read more »

InvestEveryMonth.com
InvestEveryMonth.com
11 years ago

I think one of the biggest mistakes “family CEO’s” make is not having a plan for their own departure.

Make a one or two page “set of directions” to be placed with your will or financial documents so there is at least a roadmap to accounts and information if something terrible were to happen.

tom
tom
11 years ago

i see my parents struggling with finances because they have very little financial education and absolutely no system.

I truly see now the problem with that but what can i do? Probably learn from this so I can be better for my own family in the future.

RobertD
RobertD
11 years ago

Hi Tom I know how you feel, but understand you can still give your parents help while helping yourself. To do this successfully you need to take a different tack when talking to them. Ask them to look over something relevant to personal finance with you, as you get their opinion on it they learn about things, and by helping them gain an understanding of something you will gain a better understanding yourself. A person that can explain something complex in simple to understand terms can prove he knows something those that can not are only pretending they are smart.… Read more »

studenomics
studenomics
11 years ago

Honestly this book seems like every other personal finance book that I have read reviews about. It talks about the usual personal finance stuff; plan ahead, save your money, invest your money, etc. This is the kind of content I read on blogs, where there is at least a personal touch. I am yet to be convinced to buy any new personal finance book that comes out.

tom
tom
11 years ago

Thanks for the reply Robert. I will get more involved in the financial part with my parents.

Andrea
Andrea
11 years ago

As Robert stated above, my mom and dad lived frugally and my mom continued to do so after my dad’s death. I was concerned that she would buy too much food sometimes and it would go bad- and I would suggest she buy less so that she would save money. Little did I know how much she had! Luckily, we learned about her finances and organized them before she became ill. My mom had been living on her social security for many years so her savings and investments built up. She was shocked to learn how much she had and… Read more »

Aman@BullsBattleBears
11 years ago

great post. But even if your not the family CFO at present, its still essential to know this information as family dynamics can change at any time.

Ian
Ian
11 years ago

I think it’s imprtant in a family that everyone know what is going on. So as opposed to a single family CEO, it’s critical to have a family “finance comittee”.

The Personal Finance Playbook
The Personal Finance Playbook
11 years ago

I love that as a title. I consider myself my family’s CFO. I might look into the book if they get it at my local library.

rubin pham
rubin pham
11 years ago

at least 12 months of living expenses will be my advice.
the typical 6 months will not be enough in today’s economy.

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