“If you can’t Measure it, you can’t Manage it. ” – W. Edwards Deming
Each year, as a service to our students here at Northwestern University, I hold a special session showing new graduates how to make a personal financial plan. If you are not measuring your personal finances, you are not managing your personal finances. Of course, there are some that roll their eyes and by the end there are many eyes that pop wide open in disbelief. The shocker is that even with that $130,000 job, after student loan debt, outrageous rent in San Francisco or New York, daily Starbucks’ coffee, and some minor retirement planning, it is likely that our well-employed, hard-working, graduate is playing with only about $10-$25 in uncommitted disposable income. Do the analysis sometime! You probably have less uncommitted money than you thought. It can be depressing, but I don’t mean it that way. The challenge and risk is that one can easily be in constant debt without a plan. Still, $20 dollars saved each day over a life time (and invested) can easily reach into the millions. Why is uncommitted income important as a metric? It is the amount that we can use for special interests and the future. Think of it as a surplus. Financial surplus allows people to buy homes, start families, start businesses, take vacations, and accomplish the many goals in their lives. My message is about helping our graduates build a plan for just that. Grow your surplus and manage your debt and lifestyle to have surplus.
With our current presidential election mired in many levels of drama and discontent, I thought it would be useful to reflect on the same financial analysis for the US, overall. The non-partisan, non-political website, http://www.usdebtclock.org/ has an excellent “dashboard” on the financial metrics of the US debt obligations. It is staggering!
Some details that should be part of financial planning:
In short, Americans (through personal, federal, state, and local debt) owe over $66.5 trillion. This is over $800,000 per family. The liquid funds available per family is not quite $9,500. That is our savings or surplus.
We have wealth in America, too. The value of our businesses, homes, and personal assets is estimated at over $123 trillion, and many of those assets have taken generations to build. Assets per citizen are about $381,000, but probably you know many who have less than that and some who have more than that.
We have 324 million Americans. The following statistics are powerful with that population in mind. Ponder that:
And we have to make a plan to do this with our annual $18.5 trillion in GDP. It seems there should be a way, no different than for the students in my class.
We should be looking more at these numbers and building a plan for the future. Measure it and manage it! We should also be asking our governments (federal, state, and local) and challenging the existing political parties to build financial plans to resolve this.
Note: All data is of October 19, 2016.
Professor Walker provides keynote talks, seminars presentations, executive training programs, and executive briefings.
Recent talk topics enjoyed by clients have included:
“From Big Data to Big Profits: Getting the Most from Your Data and Analytics”
“Leveraging Artificial Intelligence and Automation at Work”
“Winner Take All – Digital Strategy: From Data to Dominance”
“Success with an Inter-Generational Workforce: From Boomers to Millennials”
“FinTech, Payments, and Economic Trends and Outlooks in Consumer Lending”
“The World in 2050: Risks and Opportunities Ahead”
Exceptional executive training programs have included:
“Digital Disruption, Automation, Analytics, Data Science, the IoT, and the Big Data Wave”
“Master Course on Operational Risk: Measurement, Management, Leadership”
“Complete Course in Risk Management: Credit, Market, Operational, and Enterprise Risk”
“Cyber-security Training: Prevention, Preparation, and Post-Analysis”
“Managing Your Brand and Reputation in a Crisis.”
“Strategic Data-Driven Marketing”
“Enterprise Risk Management and the CRO”
Russell Walker helps companies develop strategies to manage Risk and harness value through Analytics and Big Data. As Clinical Professor at the Kellogg School of Management of Northwestern University, Russell Walker has developed and taught leading executive programs on Big Data and Analytics, Strategic Data-Driven Marketing, Enterprise Risk, Operational Risk, and Global Leadership.
He founded and teaches the popular Analytical Consulting Lab and Risk Lab, experiential classes, which bring Kellogg MBAs together with real-world projects in Analytics and risk evaluation.
His is the author of the book From Big Data to Big Profits: Success with Data and Analytics (Oxford University Press, 2015) which examines data monetization strategies and the development of data-centric business models in the new digital economy. He is also the author of the award-winning text Winning with Risk Management (World Scientific Publishing, 2013), which examines the principles and practice of risk management as a competitive advantage.
Dr. Walker consults with firms on the topics of Big Data and Analytics, Risk Management, and International Business Strategy.
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