WHEN personal finance coach Randell Tiongson asked the audience at the recent Money Sense Live’s Family Finance 101 seminar how many have made decisions they regretted later on, a number of hands went up. Randell was quick to admit that he, too, has made bad decisions in the past.

“People can be logical in business but illogical in the house,” he says. “At the end of the day, it’s how we use money in the house that determines the quality of life. So treat your house like a business.”

Randell explains this further: “The household is an enterprise that operates like a business.” For instance, households have revenues (your income) and non-discretionary costs (bills). It needs efficient use of cash flow and wise allocation of resources over time. A household has assets and liabilities which must be taken into account in planning out one’s personal finances.

Just like a business, the household calls for people to make logical decisions and promote efficient operations. To do that, here are some valuable tips he offered:

1. Money that comes in must be bigger than what comes out.

2. Be objective-oriented.

3. Observe the 20/20 rule: Prepare for retirement 20 years before you actually need to retire.

4. Come up with a budget. Don’t take out wants; otherwise your budget will be like a New Year’s resolution that doesn’t get carried out. Prioritize needs.

5. Reduce consumer debt. “You can’t even start investing if you have liabilities.”

6. Use the liquidity ratio. “If the ratio of your expenses to income is 85 to 90 percent, that is too high. The solution is not always to increase income.”

7. Set goals.

8. Use the integrated portfolio approach for financial decision making. Don’t use emotions in financial planning, especially in investing.

Wise words from a wise family man.