After identifying your values, the next step in creating a financial plan is to create a vision. Your vision could be for your personal financial situation: saving or earning more money to buy a home, for retirement, to travel more, 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 specific. Personally, our overall vision centers around financial independence. As I mentioned in a recent article for US News & World Reports, my husband and I are working towards paying off our 30 year mortgage in the next 10 years. Doing so will help us become financially independent that much sooner and allow us to put additional money into a college fund.
While your vision might change over time, it should still support your overall values. When we were saving for the down payment for our house, we had our future family in mind. Our vision included the neighborhood, cost, number of bedrooms and bathrooms, and when we’d like to start the home buying process. We weren’t buying a house for the sole purpose of turning a profit down the line. We were looking for a home where we could raise our family and not be stretched financially.
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. Another tip is to nickname bank or investment accounts for what you’re saving for. And if your vision has a deadline, write smaller goals and reminders on your calendar.
I hope you find this series helpful. My goal 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 create a plan that works for your unique situation instead of just following a formula.