In this episode of Money Lessons, Andy launches a brand-new series on personal financial management by drawing the map: the six jobs your money has — earn, spend, borrow, protect, grow, and give.

He explains why spending feels so effortless in a consumer-driven economy where household spending makes up about 68 percent of everything the U.S. produces in a year. Along the way, he introduces the idea that will guide the entire series: managing your money is stewardship of your own small economy, held in trust for your future self and the people who count on you.

The episode closes with one simple assignment — watch the flow this week, and name the job each dollar is doing. New episodes every Saturday morning.

Optimally, your company’s budget should be an elegant financial expression of a tight, cohesive storyline that explains how tactics and execution in the upcoming year align with the company’s purpose, long-term vision, and master (or top level) goals.

Magical thinking in business typically evidences itself as a disconnect between the capabilities, skills, and capacity of the teams that are actually doing the day-to-day work of the business, and what management believes are the capabilities, skills, and capacity of those same teams.

This is why measurement and transparency are key components of any effective management operating system. If everyone has access to the same information and that information is shared consistently through time, then the gap, dare I say gulf, that can exist between the information that makes its way up to the C-suite and the reality of operations at ground level can be closed. 

In my experience, run rate and momentum are the most important things that determine a business’s performance early in the new year. You can have glorious PowerPoint presentations that illustrate a bright, shiny New Year, but if there’s no momentum and your teams haven’t already upskilled and allocated significant resources to the plan, then you’re almost certainly going to face disappointment in Q1.

It should be no surprise to frequent readers in this forum that the tools needed to improve the accuracy and fidelity of business forecasting are pinned in the tenets of continuous improvement and organizational health. The “ah ha” moment I hope you’ve had is the importance of having strong financial modeling skills embedded in your organization.