Let's say you attend the annual meeting of a company you're considering as an investment. The CEO steps to the podium and says, "Good morning, everyone. We had another great year! However, I can't tell you exactly how great because, per usual, we didn't produce an annual report." Shareholders in the audience begin to ask questions: How much does the company pay its suppliers? Can it get better deals on its contracts? What's the size of the payroll? The CEO can't answer any of these, eventually saying, "Listen, I have no idea where our revenue goes. I just know that the phones still work, the lights are still on, and my paycheck clears. Isn't that good enough?"

We hope you'd leave that meeting with no desire to buy shares of the company, wondering what kind of business doesn't keep good books.

Yet this is how most people operate, with only a vague idea of where their money goes. You wouldn't invest in a company that has tenuous control of its cash flow, right? Many of us don't hold ourselves to that same standard, even though our personal financial empires are our biggest investment. As the CEO of your household, your ability to "keep good books" will have a much larger impact on your ability to accumulate and spend wealth than any stock you'll buy.

Where Does Your Dough Go?
Your job as your family's chief executive is to take control of your cash flow, directing it toward priorities rather than frivolities. If you're still working, this gives you the ability to invest even more of your paycheck. For the already retired, fine-tuning expenditures can lead to a better quality of life and a longer-lasting portfolio. Here's how.

1. Follow the Money Trail
In his book Money and the Meaning of Life, Jacob Needleman writes that tracking spending "shows us that almost all of our life with money (and this means almost all of our life, period) proceeds without our conscious attention... [S]uch an exercise can show us that the values we actually put into practice, as measured by what we spend money on, do not correspond to what we imagine about ourselves."

We know that reviewing past bank and credit card statements isn't much fun -- and might lead to all kinds of regret and guilt. On the other hand, when you analyze your spending, you can identify the expenditures that don't provide long-lasting value, and direct those funds to what's most important. The task can be made somewhat easier with software such as Quicken or Mint that categorizes your spending. Some year-end financial statements will also do this. Plus, you can download free financial Excel spreadsheets from office.microsoft.com (click on the Templates tab at the top).

2. Sweat the Big Stuff
While it's admirable to save a few pennies on every purchase, focus first on the big-ticket items. According to the Department of Labor's Consumer Expenditure Survey, Americans spend the most money on housing, transportation, and food (see table below). We all need to eat, move, and dwell, but we may be buying more than we need.

I Spent What?

Source: 2008 Consumer Expenditure Survey

Take cars, for example. The point at which most owners give up on their jalopies is when they're faced with a large repair bill. Yet, according to the Comerica Bank Auto Affordability Index, the average new car costs $27,500, approximately 23.1 weeks of the median family income. Finance that purchase over four years with a 6.5% loan, and you'd pay $652 a month - or $7,824 a year. Unless you're paying $8,000 or more to keep your heap on the road, it might pay to keep the old car -- as long as it's safe.

3. Search for Savings
There are thousands of ways to pay less for more. When looking for retirement-enhancing savings, start with larger expenses (such as insurance) and recurring bills (such as phone and cable services) to see if you can get a better deal or change your service so you pay only for features you use.

Ready, Set, Save
As CEO of your household, you're running the most important business. Be sure to separate your needs from your wants, and you'll optimize your expenditures, improve your quality of life, and boost your portfolio in the process.