In October, I attended CFO Rising West in Las Vegas. This was an event produced by CFO Magazine and geared towards helping CFOs and financial executives drive profits and performance. This was an especially timely message given the current state of the global economy and the speakers varied from those cautiously optimistic about the economy to those that believe it will get worse, much worse. In the exhibit hall, one of the attendees lamented her company’s situation and longed for a return to common sense.

I don’t have a crystal ball but I’ve always been an optimist and a believer that now is a time for perseverance. If we can learn from the mistakes we’ve made and if we can bring common sense into our way of life, I think we can get back to some sort of equilibrium sooner rather than later. And from there, we can emerge stronger and wiser. Like my friend from the conference, I think we need a healthy dose of common sense.

So, is common sense something we can bring back? Over the years, we as a nation, have are expected to live beyond our means. This makes the ability of a common sense resurgence a far more difficult question to answer.

The events of the past few months reminded me of an article I read in a Business Week Guide to Careers when I was graduating college in the mid 1980’s. This was an article that sought to help graduating students enter the workforce with a realistic view of the cost of living and the pitfalls of mismanaging a newly-found income stream. I don’t have a copy of the article any more but I still recall he words of wisdom and common sense it contained. Over the years, I’ve mentioned these concepts to my colleagues and friends. Today, it still serves as good dose of common sense.

Be realistic about what you can and cannot afford.
The article said that three times your gross household income should buy you a house. Thus if your annual gross household income is $75,000 per year and you’re interested in buying a house, you should be looking at a property selling around $225K. Can’t find a house in your range? Then don’t buy one. The article went further to state that three weeks of your monthly salary should pay all the bills and that the fourth week of salary should be your budget for savings, investments, and entertainment--in that order.

A car is a utilitarian device.
As a depreciable asset, a car for those starting out in a career is simply a means of transportation. The article suggested it should be used, safe, and paid for in cash--maybe a zero-interest loan from the First National Bank of Mom and Dad--if possible. Options are just that, options. As your station in life improves, so can your ride--although that is optional, too.

Exercising credit is a good way to practice savings.
The article admonished readers to use credit cards like this: First, determine what you wish to buy. Second save up the money to buy it. When you have the money to buy it, use the credit card to purchase it and pay the bill in full using the money you’ve saved. Repeat as often as necessary to build your credit.

For those of us in Corporate Real Estate, we can apply these three lessons to our business as well. First, be realistic about what your real estate is actually costing you. Don’t just consider rent and operating expenses, but consider the financial drain resulting from a lack of lease flexibility on your business. For the foreseeable future, flexibility will be more valuable than you realize.

Second, think of space as utilitarian but just start there. Now, think of everything beyond basic space as having to achieve an ROI before you plan for it. This is where benchmarking and space standards can play a big part. The more you are in line with your industry benchmark for space, the more you have the freedom and financial flexibility to add options.

Finally, exercising credit is a good way to practice savings. The existing credit mess should be motivation enough to make sure your company’s cash position allows you to weather the tough times. Perhaps you should consider whether it’s time for someone to help you analyze your portfolio for opportunities. From here, you too can emerge stronger and wiser.

Vik Bangia is vice president of National Accounts for CresaPartners, an international corporate real estate advisory firm that exclusively represents tenants/space users and specializes in the delivery of fully integrated real estate services. The views expressed in this article are the author’s own.