Shortly after starting Fiscally Chic, I wrote a 4-part series about makingunder our finances. This approach to saving and budgeting was inspired by Jess Lively and her steps for makingunder your life. A makeunder includes getting rid of the excess junk and clutter in your life to make room for nicer, more intentional purchases. Even if you aren't buying new things, your ratio of "nice" to "not nice" things will improve as you donate, recycle, or throw out the "not nice" stuff.
In a financial makeunder, cutting back on wasteful spending creates more opportunities to save and spend on the good stuff: retirement, giving more to your favorite charity, etc. In a sense, you can also makeunder the ways you earn money by negotiating a higher salary or increasing your rates or product prices.
When I first wrote about makingunder our finances, we were saving up to buy a house. Now that we've been living in said house for 2+ years, changed jobs, and have a baby; our financial situation has changed. So I thought it'd be helpful to revisit the financial makeunder steps. Additionally, I want to share the steps for those who may not have read the posts back then. Enjoy!
Step 1: Create a vision
Before overhauling your finances, think about your overall vision. Your vision could be for your personal financial situation: saving or earning more money to buy a home, for retirement, to go on vacation, or for your child's college fund. You might also want to payoff student loans, your mortgage, or credit card debt. Or maybe you're looking to buy a new car. If you have a vision of starting a business, you're probably creating a savings cushion before quitting your full time job.
Creating a vision will set the focus for the next three steps; so get as specific as you'd like. John and I have an overall vision of financial freedom. This includes several supporting goals of paying down our mortage and saving for retirement. Soon we'll be starting a college fund for Monica. When we were saving for the down payment for our house, our vision included the neighborhood, cost, number of bedrooms and bathrooms, and when we'd like to start the home buying process.
When creating and solidifying your vision, it's helpful to put together an inspiration board. Pinterest is a great place to collect images of your dream home or exotic travel destinations. If you want to go old school, write down your vision and post it on the bathroom mirror or refrigerator door. And if your vision has a deadline, write smaller goals and reminders on your calendar.
I hope you find this series helpful. As Jess puts it, a financial makeunder "takes the stress out of it in a way and doesn't make everything good or bad, but intentional or not intentional." The goal of this series is to help you examine why you spend money and your priorities instead of just "do this" and "don't do that." I want to help you put together a plan that works for your unique situation instead of just following a formula.
Next week, step 2: exfoliate stuff.