Promote Yourself to Chief Financial Officer

Step 1: Promote yourself to Chief Financial Officer

When you change the way you look at things, the things you look at change. - Dr. Wayne Dyer

The first step in seizing your financial agency is to “promote” yourself to Chief Financial Officer (“CFO”) of your own life. For those of you who don’t come from a financial background, a company’s Chief Financial Officer is generally the person in charge of allocating investments for a company. I believe that every person should view themselves as the CFO of their life. You are responsible for:

1. The income you earn (usually in the form of a salary),

2. The expenses you have (in the form of stuff that you buy with that salary), and

3. Investments you make with whatever is left over after you pay for your expenses.

When you break it down like this, our lives are not so different from how a company operates. The fundamental difference is that a company operates for one purpose - creating monetary value for its shareholders. People on the other hand generally operate with a different purpose - creating happiness in their life (whatever that means to them). Sometimes that means making as much money as possible, but really you just want to have enough money to purchase experiences and things that will help you be happy.

Someone who loves the outdoors and hiking probably has different material wants than someone who loves to eat at fancy restaurants. A lot of things that give us happiness don’t cost anything (time with family and friends for instance), and realizing that is helpful because it reorients how much money we actually need to be happy. The key is defining what exactly it is that you want with life, and then making sure that however much money you have today and in the future can help purchase that “happiness”. Money by itself cannot buy happiness, but with a little introspection money can help you buy things and experiences that can help you be your happiest self.

This all brings me back to my first point: you need to promote yourself to CFO of your own life so that you can maximize the amount of happiness your life generates. As a newly promoted CFO, your first task is to take stock of where things stand today so that you can plan on what to do for tomorrow.

• Are you happy with your life today? In other words, for the amount of money you are spending on things, are you generally happy? Do you have goals and dreams that you wish to pursue in the near future? If so, how much money would you need to pursue those goals and dreams?

• Before even figuring out what to invest in, you need to make sure that you have money to actually invest. Are you spending less money than you are making right now? Are you “cash flow positive”? If you aren’t, how can you either reduce expenses (buy less shit) or increase revenue (start earning more) to get “You, Inc.” in better financial position?

• If you are spending less than you make, then how can you invest what is leftover to be happier both today and in the future?

• If you have debt, are you paying that debt off as fast as possible? Do you have a plan to reduce your debt so that you can take smart risk with your life and career?

Once you have figured out the answers to some of these fundamental questions, you can then go about putting together a “business plan” for your life. Put more simply, you can start to plan on how to maximize your happiness with the resources you have.

I understand that this might all sound a bit academic, so I thought I would explain how I utilized this framework that I mention above to create my own business plan for my life. I first took stock of where things stood at that time. I was working and making good money at the job that I currently had, and with all of the things that I was spending money on I could safely say that I was purchasing an acceptable amount of “happiness.” However, when I took a look at my life I kept coming back to two ideas that had stayed with me for the better part of a decade.

1. I wanted to be my own boss. I wanted to be the master of my fate and succeed and fail on my own merits as opposed to feeling as though my success (financially and otherwise) was going to be determined by someone else’s efforts. I had grown up around two entrepreneurs (my parents have owned and run their own small business for the last 30 years) and it was always a dream of mine to “take my shot”. The problem was that I didn’t know exactly what I wanted to do. I had a few ideas, but no “a-ha!” moment that you read about with someone like Jeff Bezos or Phil Knight. My fear was that if I kept waiting around for some “a-ha!” moment, I would waste years in my thirties searching for something that I couldn’t even define.

2. I wanted to see the world and travel as much as possible. When I took stock of the things that brought me happiness, traveling was the one thing that returned the most happiness to me no matter how much money I spent on it. Without even realizing it, I was allocating my precious resources to travel precisely because it gave the highest “return of happiness on investment”. Every time I traveled to a new place I came back feeling invigorated and in a much better headspace. I also found that travel stimulated my creativity in ways that working at my job did not.

The conclusion that I came to after this exercise was that I needed to give myself time to (i) explore my deeply-held belief that being my own boss would make me the happiest version of myself and (ii) travel as much as possible. I came up with a short term and long term plan to fulfill these two desires.

Short Term Plan -

1. I started to carve out time in my day to read more, listen to more podcasts, and explore different business ideas. I made this a thirty minute daily practice. I wanted to give myself the opportunity to be inspired by something I read or listened to. More importantly, I wanted to create an environment that fostered inspiration.

2. Simultaneously, I started to leverage my company’s new work-from-home policy. I was just as productive regardless of where I was working from, and I found that as long as I was willing to suffer through some weird time zone changes, I could start to incorporate more travel into my day-to-day work life. With this newfound emphasis on travel, I found myself working from all sorts of places: Australia, Fiji, Europe, India, and Thailand to name a few. Not only was my work getting done, but I even received a raise and a promotion during this time period.

I knew that my Short Term Plan was only going to work for some time before something was going to give. The demands on my time at my job were only going to grow as I continued to progress in my career; that was just the way things worked. I could go to another company, but whenever you start a job at a new place there is an intensity that is required to prove yourself to your new colleagues. You need to earn their benefit of the doubt. Paradoxically, I would have probably had to work harder if I switched jobs. I could try and scale back at my current job to continue this new status quo, but scaling back in Corporate America is akin to career suicide. More disturbingly, publicly stating that you wanted to scale back was career suicide and might put your head on the chopping block way faster than you had anticipated.

My Short Term Plan only worked because I was in a sweet spot where I had earned the benefit of the doubt from my boss and my colleagues. They trusted that I would get my work done, I did get my work done, and that was good enough for now. I guessed that I had about two years of doing this before something would have to change. Instead of assuming that this status quo of “good enough” would continue in perpetuity, I started investing in my long term plan.

Long Term Plan - 

My Long Term Plan was to give myself three years to pursue my entrepreneurship dream and to travel while doing it. There was no scientific formula as to how I chose three years. I just knew it felt good to think about having three free years to pursue business ideas and to travel as much as possible.

The next question was what would I need to “purchase” these three years of pure adventure? I knew I needed money, but how much? Again, I took a crude metric: what was our average monthly spend over the last two years? I then extrapolated that monthly burn rate for three years and came up with how much we would need for this grand adventure.

Once I had my “Adventure Budget”, I finally had a goal. The money I was making started to have meaning in a way that it had frankly never had. More importantly, the money that I was not spending started to also have more meaning. It gave context to WHY I was not spending money on things. It was because I had a very specific goal in mind, and that was worth more than what I could be spending it on. Not to get too personal, but this new framework was the reason why my wife and I decided against buying a house when interest rates were very low during Covid (and now we might never get a chance to buy a home again! Kidding….I hope). In a vacuum it might have made sense to buy a house, but it would have messed up our long-awaited adventure.

We started saving more than we had before, and I bucked one of the most conventional of conventional wisdoms that you will ever hear if you spend any time learning about investing: ALWAYS stay 100% invested. The theory behind this maxim is that it is very difficult to time the market, so don’t bother trying. Once you have a built-in rainy day fund, take the rest of your savings and keep it invested in the market so that your money can work while you are not. The problem with this conventional wisdom is that it assumes that you will have a steady cash flow in perpetuity. I wasn’t entirely sure how long it would take me to start making money after I left my job. More importantly, I didn’t want to feel pressured to take another job before I had given this adventure its full due.

So because of this dream that we had, I systematically took more risk off the table than I otherwise would have because the potential returns I could have made with the money invested was not worth the risk of that money losing value in the short term and prolonging the start of our adventure. I still kept a good portion of my portfolio invested, but I created a larger cash position than I ever had. Through a lot of luck, planning and saving, we hit our “Adventure Budget” goal two years later, and it enabled us to finally quit our jobs and start our adventure earlier this year. None of this is to encourage anyone to quit their jobs and to travel the world. Rather, the point of this is to highlight the benefit of taking stock of your finances. Are your finances enhancing or detracting from your happiness?

Promote yourself to Chief Financial Officer of your life, and figure out whether your life is returning enough happiness. If your life is returning enough happiness, then fantastic! The very act of coming to that conclusion will give you satisfaction. If your life is not returning enough happiness, start asking yourself why. Come up with a business plan to yield the most happiness, and then go about trying to execute on that. If you don’t do this, you’ll run the risk of waking up one day wondering how you got there. You owe it to yourself to live an intentional life!

^{Disclaimer: Nothing contained in this website and newsletter should be understood as investment or financial advice. All investment strategies and investments involve the risk of loss. Past performance does not guarantee future results. Everything written and expressed in this newsletter is only the writer's opinion and should not be considered investment advice. Before investing in anything, know your risk profile and if needed, consult a professional. Nothing on this site should ever be considered advice, research, or an invitation to buy or sell any securities. Rohan Muralidhar is not a licensed securities dealer, broker or US Investment adviser or investment bank. This newsletter is not an offer to buy or sell, nor is it a solicitation of an offer to buy or sell or to participate in any advisory services or trading strategy.}