If there’s ONE thing you need to start taking control of your finances, it’s a vision. Your vision is your dreams and goals—it’s the life you see for yourself 5-10 years from now. And while it’s not just about money…

Money does play a major role.

It determines whether or not you’ll be able to achieve goals like buying your dream car, planning a wedding, or retiring comfortably.

Now, there’s no one right way to create your vision, but I like to keep it simple and make a list.

You with me?

Then grab a pen and paper, set yourself a timer for 5 minutes, and finish the following sentence: Five years from now I want to…

Finished? Great! Keep your list handy—you’ll need it for the next step.

Now, I see way too many people set financial goals based on their visions—then fail to follow through because they didn’t figure out the HOW.

If you don’t want that to be you…

Choose the most important goal from your list, and I’ll walk you through working backward and creating a plan for accomplishing it.

To show you how it works, I’ll use the example of a person in their late 20s who wants to take a dream trip to Dubai.

1. Decide Your Timeframe:
This part is pretty easy. In an ideal world, when would you have enough money to accomplish this goal?
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For our example, let’s say this person wants to take their trip for their 30th birthday, which gives them 2 years to save up.

2. Decide Your Budget:
How much money do you anticipate spending? Try to be thorough in answering this, thinking about unexpected expenditures.

Back to our example—Dubai is expensive, and if this person wants to stay for 4-5 days, they’re looking at spending around $3,500.

3. Divide The Cost By The Number Of Months Between Now And Your Desired Date

This comes out to $145 for the person in our example. In other words, to meet this goal, they would need to save $145 per month.

If you can’t afford to save that much per month, consider pushing your desired date back.

I’d recommend working through the rest of your vision and working backward to see what you need to do.

I want to stress that no matter where you are when it comes to financial knowledge—it’s possible to make and be consistent with a budget, especially when you stick to the five steps I’m about to give you.

Also, because income and expenses are changing regularly it’s important to do your budget every month and make sure you’re still on track for your budget and you can make revisions if necessary.
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To put it simply, your budget consists of two factors—your income and your expenses. To make a budget you need to:

1. List Your Income

In order to figure out how much you can dish out to savings, investments, and put aside for your spending, you need to know how much income you have coming in every month.

That’s why we start with income, because it sets the stage for everything else, and allows us to make an accurate budget.

2. List Your Expenses
This step is one you’ll want to make sure you’re thorough about, as your expenses take away from your income and if you have a lot of expenses and not much income, it will give you an idea of whether you need to increase income or decrease expenses.

It’s a great idea to either have a physical bank statement printed out and in front of you, or have your bank account open in another tab if you’re doing your budget electronically—this allows you to see all your expenses easily so you don’t have to rely on your memory.

There are two parts to this step—first we want to list out all the expenses you have, then we’re going to use that information to budget for those expenses and round up the actual cost to give the budget a cushion.

3. Subtract Your Expenses From Your Income
Now comes the part where your budget picture comes to life—now that you’ve got a list of all your expenses and a list of your actual and cushioned expenses, add them both up, and subtract your expenses from your income. Once you do that you may have two things happen:

- You may be left with a negative balance, or little to no money left over after doing the equation

- You may have a surplus of money left over


If option one happens to you there’s a few things you need to account for when creating your budget in the next step.

Having a negative amount left over or barely any left over means either your expenses are too high or there are too many of them—OR—your income isn’t enough to cover your expenses.

4. Make Every Dollar of Your Leftover Money Work for You
Now that you know what’s left, assign every dollar of the leftover money a task—whether it’s retirement, savings, fun spending, etc. It could look something like this if you had let’s say $1000 left over:

Retirement: $200 
Savings: $200
Emergency fund: $300 
Personal spending: $150 
Entertainment: $50
Dining out: $100

This is where you’d add your savings goals from your vision.

5. Repeat Before the End of Every Month
You’ve created your budget, so… now what? Consistency. Is. Key. You want to do this every month to get ahead of income and expense changes to revise your budget.

It’s also incredibly important to track your spending throughout the month once your budget is created. This will help you stay on track, not go over your spending limit, and stay consistent with your budget.