Soon enough on this blog I’ll be getting into all the practical steps of building wealth: creating a budget, saving your emergency fund, investing, and more.
But in the beginning, there’s a step that I believe you need to take before all others. This step was almost single-handedly responsible for me finally starting to have money left over at the end of each month, and then actually overhauling my entire financial situation.
What is that step? Simply, creating a vision of your desired financial situation.
This is nothing woo-woo, simply an application of a broader principle which I’ll mention quite frequently: intentional living.
How can creating a vision for your financial situation help? Keep reading and find out!
What Is Intentional Living?
Intentional living is one of the central principles which I believe is necessary for starting to get control of your financial situation.
Most people live unintentionally. They have no guiding vision for their money, so it just goes to the first convenient or vaguely interesting thing that presents itself. Maybe it goes to eating out, or to clothes, or technology—generally not because you actually, truly want those things, but just because you have money to spend.
Here are some examples:
- You get a $10,000 raise at work. Do you make a plan for what to do with that extra 10K per year, or do you simply allow lifestyle creep to kick in and keep living as you always have?
- You know you want to go on vacation next year. It’ll probably cost you $1,500. Do you set aside $125 per month for the next year so you have that money ready to go for the vacation when it comes around, or do you forget about it and pay for it on your credit card, going further into debt?
- You’d like to put more money towards a new hobby of yours, but you don’t see where you can fit it in. Do you comb through your expenses seeing what you can cut back on, or just resign yourself to not being able to afford it?
Intentional living is, simply, living according to some deliberate intention you hold in mind. Instead of living by default and letting the money flow wherever it goes, you deliberately and intentionally decide what you want your money to do for you, the kind of life you want to lead, and how you can achieve these goals.
Plenty of people make six-figure incomes and still have no money left over at the end of each month. Many people make barely above the poverty line and yet have healthy savings accounts and a nice cushion to protect them against unforeseen circumstances.
The only difference is whether you are living intentionally or not.
Creating Your Vision for Your Financial Situation
So the first question is, what do you want? What sort of life do you want to lead? What do you want your money to do for you?
This could be big or it could be small. It could be something that barely seems possible, or something well within your reach if you’d only put in the effort.
And to be honest you can have more than one vision. You can have a short-term vision for something you’d like to achieve in the next few months, and a long-term vision for what you’d like to achieve in the next 5-10 years.
Here are some examples, of visions both small and large:
- “I want to have at least $500 left over in my bank account at the end of each month.”
- “I want to have 6 months of expenses saved up in case I lose my job.”
- “I want to max out my IRA.”
- “I want to start my own business and be self-employed.”
- “I want to double my income.”
- “I want to get out of debt.”
- “I want to travel at least twice per year.”
- “I want to buy a house.”
- “I want to retire early.”
I would say that all of these goals are accessible to anyone reading this. Some will be fairly easy, while others may be quite difficult. But they’re all possible.
The thing is that you want to be specific. Too many people just say “I want to be rich.” So they play the lottery thinking they’ll just happen to win one day, and then all their dreams will come true.
My own mother does this. She always tells me, “I’m going to win the lottery one day and then I’ll buy a house.” It hasn’t happened yet, and she’s no better off financially now than she was 5 or 10 years ago.
Even if you don’t have any plans of becoming rich, this can still manifest itself in other ways. For example, many people think that the money they need for retirement will just show up. They never plan for it, never set much if anything aside, and then their retirement years are spent either relying on others or struggling to get by.
Your vision shouldn’t be wishy-washy. This is magical thinking and it won’t work.
Decide what you want, specifically, in the next 3-6 months, the next 1-2 years, and the next 5-10 years (or longer). We could call this your short, medium, and long-term visions.
There’s no right or wrong here. What you want is what you want. But it needs to be specific, and actionable.
Winning the lottery isn’t actionable, because it’s so incredibly unlikely, that you really have no control over the outcome. Increasing your income, maxing your IRA, or buying a house are all actionable goals. They are goals you can split into steps and make real, intentional progress towards.
My first vision was just to have some money left over at the end of the month. I was tired of only having $50-$100 left over each month.
So I set my goal. I don’t remember my first amount, but it was something really small like $200. I did that in just one month. Then I set a slightly larger amount I wanted to have left over, and achieved that.
I didn’t even really change all that much about my approach at that point. These were honestly pretty easy goals: I just hadn’t bothered to actually put the effort in. But once I did, I saw my bank balance starting to increase over time, just by spending a bit less here and there.
At this time I was still on SSI, plus making a little bit of money through my business, but my monthly income never went far above $1,500 or so at that time, sometimes far less.
But I just decided that it was important to me to have more money left over, so I started making smarter, more deliberate decisions to meet my intentional vision I had set.
Then my vision was to get off of SSI and actually make some real money. And in less than 6 months I had a job as a web developer. It paid pretty terribly for web development, but it was far more than I was making before, so I was happy.
I got pretty good at this from that point on, and created many other visions for myself. Just this year I decided to increase my income again and got another job paying double what the old one paid. I created the vision of starting up Wealth Seed, and here I am.
The point is, without intentional living—without creating intentional visions for yourself—you’ll just drift through life. You’ll never truly gain control over your money until you decide what you want that money to do for you, and what kind of life you want to lead.
The really cool thing is that I will soon be recommending a tool that is all about helping you create a plan for your money, and executing that plan. But before we get there, I just want you to create some short, medium, and long-term visions for yourself.
So, what is your financial vision? Feel free to let me know in the comments.