Being the household CEO can be a very lonely job indeed, but it doesn’t have to be. In multiple-person households, there may be others (usually the spouse) who will wish, or even insist, to be a part of the financial management process. Luckily, in order to keep harmony within the household, the savvy household CEO can delegate many of his responsibilities to a second management position. This adjunct position is known as the household chief financial officer (CFO).
In the Penzo household, it is the Honeybee (my wife) who takes on the role of household CFO, while I function as the household CEO.
The role of household CFO is not some honorary position invented just to keep a spouse from getting their feathers ruffled. Indeed, the position of household CFO is complementary, and certainly no less important, to the role held by the household CEO. In fact, I will argue that the role of CFO is actually more labor and time intensive than the role of household CEO alone. Do I acknowledge that fact to the Honeybee? Of course not! ðŸ˜‰
So what, exactly, does the household CFO do? Letâ€™s first examine the CFOâ€™s role in the corporate world.
In the business world, the corporate CFO can be responsible for performing many tasks including investor relations, managing capital, financing purchases, analyzing potential mergers and acquisitions. The corporate CFO is also responsible for condensing financial knowledge into a form that can be used by the corporate CEO in order to help him make strategic decisions.
Like her corporate counterpart, a household CFO is a financial manager. She is responsible for keeping her fingers on the pulse of the household through careful record keeping. Furthermore, it is the household CFO’s responsibility to thoroughly understand the household CEO’s vision (or the agreed-upon joint vision of the CEO and CFO). And if the household CEO ever fails to accurately convey that vision, then it is up to the household CFO to say so. The household CFO is also expected to notify the household CEO at the first sign of anything that may adversely affect the household strategic plan so that potential problems can be addressed and actions quickly taken to rectify the situation.
In a nutshell, whereas the household CEO is responsible for maintaining a strategic vision by looking into the future, the household CFO must look into the past via the maintenance and examination of records such as bank statements. The CFO tracks every little item â€” even when it comes to more obscure things like the cost of delivering a baby! By looking into the past, the household CFO can then help the household CEO budget and plan for the future.
So to summarize, the seven primary tasks of the household CFO are:
1. Understand the household CEO’s vision and strategic plan
2. Establish financial record archives and databases
3. Ensure all checking and savings accounts are balanced and accurate
4. Pay the bills and deposit all income into the proper accounts
5. Track all household income and expenses
6. Identify potential negative financial trends
7. Communicate your data and findings with the household CEO
Iâ€™ve already discussed the six primary tasks of a household CEO. But keep in mind that, in the absence of a willing volunteer, the household CEO is also responsible for performing all these duties too. In many cases, the household CEO may also unilaterally choose to handle both tasks.
However, I want to stress again that when there is more than one person willing to take part in managing the household finances, designating a household CFO provides an excellent opportunity to spread out the overall responsibility and work entailed in running a household. This becomes especially advantageous in households such as mine where there is a stay-at-home spouse.
Because the household CFO has a larger workload, Iâ€™d like to strongly recommend that the position of household CFO be taken by the stay-at-home spouse. This arrangement has worked extremely well for me and the Honeybee over the many years weâ€™ve been married. As CEO, I set the household budgets and long-term planning, while as CFO she handles the day-to-day operations and continually tracks our performance to the budget and forecasts trends.
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