Excerpt

The following is from the March 9, 2009, edition of The Dallas Morning News. David Lei, an associate professor in SMU's Cox School of Business, provided expertise for this story.

Take business-style approach to managing household budget

 

March 10, 2009

By PAMELA YIP
The Dallas Morning News

Many people dream of owning a business or being the head of their company.

They may not realize they have the makings of a corporate entity right in their own household.

Think of it as Me Inc., with yourself as chief executive officer. Then manage your personal finances as if you were running a business. . .

Short-term planning and long-term planning are important to financial success for businesses and individuals, said David Lei, associate professor at Southern Methodist University's Cox School of Business.

"Perhaps the most important step that households of any size can take is to adopt the rudiments of a strategic plan that encompasses not only their day-to-day, week-to-week budget, but also anticipates potential changes that could unexpectedly occur at any time, both good and bad," Lei said.

A "workable strategic plan" includes budgeting for immediate needs, such as food, clothing and gasoline, and also for what Lei calls "jolt items that could disrupt what the family expects in the short-to-medium term."

Those "jolts" include short-term cash squeezes from job changes, pay reductions or higher health insurance premiums, Lei said.

Read the full story.

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