We’re celebrating Financial Wellness Month with our Executive Vice President and Chief Financial Officer Steve Fusco! We asked Steve below, “What are some ways we can manage our money strategically like a bank CFO?”
Steve: To manage your money like a bank CFO, focus on financial planning, cash flow management, proactive risk planning and mitigation and business intelligence to build financial resilience and long-term value. Follow some of the core principles below.
1. 𝐏𝐫𝐢𝐨𝐫𝐢𝐭𝐢𝐳𝐞 𝐂𝐚𝐬𝐡 𝐅𝐥𝐨𝐰 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭: Ensure you have enough liquidity to cover immediate expenses while also building cash reserves for emergencies or strategic investments. Track where your money comes from (inflows) and where it goes (outflows) to maintain a healthy cash position.
2. 𝐏𝐥𝐚𝐧 𝐟𝐨𝐫 𝐌𝐮𝐥𝐭𝐢𝐩𝐥𝐞 𝐒𝐜𝐞𝐧𝐚𝐫𝐢𝐨𝐬: Don’t just plan for success. Develop budgets and forecasts for best-case, worst-case, and likely scenarios so you can be prepared to act upon any outcome.
3. 𝐄𝐦𝐛𝐫𝐚𝐜𝐞 𝐃𝐚𝐭𝐚-𝐃𝐫𝐢𝐯𝐞𝐧 𝐑𝐞𝐩𝐨𝐫𝐭𝐢𝐧𝐠 𝐚𝐧𝐝 𝐁𝐮𝐝𝐠𝐞𝐭𝐢𝐧𝐠: Use current information and business intelligence (data-driven), not just instinct, to create a realistic and flexible budget (like a rolling forecast) that can be adjusted as circumstances change.
4. 𝐌𝐚𝐧𝐚𝐠𝐞 𝐑𝐢𝐬𝐤 𝐏𝐫𝐨𝐚𝐜𝐭𝐢𝐯𝐞𝐥𝐲: Identify potential financial risks, such as job vacancies or losses (income risk), market volatility (investment risk), or unexpected bills (liquidity risk), and implement mitigation strategies like insurance, creating reserve accounts and diversification.
5. 𝐈𝐧𝐯𝐞𝐬𝐭 𝐰𝐢𝐭𝐡 𝐋𝐨𝐧𝐠-𝐓𝐞𝐫𝐦 𝐆𝐨𝐚𝐥𝐬 𝐢𝐧 𝐌𝐢𝐧𝐝: Focus on profitable and sustainable growth. Allocate resources (your money) to investments that generate optimal returns while aligning with your long-term goals and risk tolerance.