Commentary: Why Managing Household Budgets and Corporate Finances Aren’t So Different

Financial lessons from Hawaiian Airlines that apply to everyday challenges, from setting goals to assessing risk.

Hawaii Business Magazine will continue reporting on possible solutions to Hawai’i’s persistent high cost of living, but until Hawai’i solves that intractable problem, we have intensified our focus on personal finance. As much as possible, we need to help local people properly manage the money they have.

That’s why we launched our weekly email Personal Finance Report and held the Money Matters conference on Nov. 9, with 17 sessions covering a vast range of personal finance topics. Over the next few months, we will be publishing condensed versions of some sessions.

The opening session at Money Matters offered an out-of-the-box approach to personal finance planning that I found helpful for goal setting, risk assessment, alignment and decision-making. I talked on stage with Hawaiian Airlines Chief Administrative Officer Shannon Okinaka, who has held financial leadership roles at the airline for two decades. The theme: how HA’s planning and processes provide guidance and best practices for you and your family’s personal finances.

The starting point for the airline – and your household – is goal setting. Okinaka recalled that many years ago, HA’s strategy “was this list of 150 items. And that’s not really a strategy, it’s just a list of things we wanted to do.”

Guided by Four Pillars

Instead, she said, the airline created four pillars – broad aspirations that guided their specific goals and planning. Four seems a reasonable number of “pillars” for your personal finances too.

Forty years ago, the financial pillars my wife and I set were frugality and saving for our first home. Frugality has been a constant (both of us are journalists, so frugality is more a requirement rather than a choice), but after we bought our first and then our current home, we added three pillars: paying for and maintaining that home, investing in our two children’s education and saving for retirement.

Our pillars remained constant, but short and medium-term goals shifted with time and circumstances.

Okinaka said Hawaiian Airlines went through the same process. Ten-year goals were broken into shorter goals and milestones to ensure success. “Some of the hardest parts of that goal-setting process was alignment among the departments, because you had finance saying, ‘We have to be prosperous and stable,’ and operations saying, ‘No, it’s most important to run a good airline, because that’s what will make us prosperous and stable,’ ” and every other team offering perspectives, she said. “But we had to walk out of the room aligned because we knew there were going to come times when we had to prioritize and say no or not now to something.”

Not an Easy Process

Reaching alignment on goals involved some of the most stressful and recurring “discussions” (actually arguments) of my marriage. Maybe in your family too because financial discussions are often emotional.

A big focus of the Okinaka-Petranik conversation was risk assessment – at the airline and in our personal finances. “My job was a lot of things but primarily two things: risk assessment and process,” she said. A big part of risk assessment is figuring “what’s the risk of making a wrong decision? A former boss said, ‘Is this a bet-the-company decision? Like, if we make a wrong decision, the whole company goes down? “Or is this a decision where, if we get it wrong, it hurts a little, but we’ll move on?”

Adopting that mindset allowed her to stop being terrified of small risks. Assessing your own level of risk tolerance is crucial. For a long time I had 100% of my retirement funds in equities, knowing I had a long time horizon and that, over time, equities have provided a better return than many other investments.

I had to take frequent deep breaths during the Great Recession and Covid pandemic, but I mitigated my risk by investing heavily in index funds rather than picking stocks and sectors. It paid off but you know the saying: Past performance is no guarantee of future results.

Hawaii Business Magazine won’t set goals for you, but we will do our best to help you reach the goals you set.