Are you frustrated with your financial situation and ready for a financial “glow up”? By now I’m sure you’ve heard the term “glow up” and watched countless videos of people improving their skincare and makeup routines. Well, let’s talk about how you can take a similar approach to kick some bad financial habits and glow the hell up!
In this article, we will provide actionable steps to take you from a financial mess to no more financial missteps. So let’s get started on your glow up to help you achieve your financial goals!
5 Steps to a Financial Glow Up
Step #1 – Assess your Finances
First things first, it’s time to get real with yourself so list your monthly income and all of your monthly expenses. You will want to be as detailed as possible so make sure you include monthly subscriptions, weekly Starbucks app reloads and miscellaneous expenses like birthday gifts and oil changes.
You need to start with a clear financial snapshot so that you can easily identify any issues such as your expenses outpacing your income or your debt reaching alarming figures. As uncomfortable as it may be, it is imperative that you have all of the information in one place so that you can move on to step number two.
Step #2 – Prepare a Financial Plan/Budget
Now that you’ve completed step one and have all of your income and expenses listed in one place, you’re going to use those figures to develop a financial plan or budget. You should start by breaking your expenses up into two categories, needs, and wants. Needs are your rent, health insurance, food (groceries not sushi), and utilities. Wants are your streaming services, mani/pedis, Starbucks, and entertainment or travel expenses.
You haven’t started cutting anything out just yet, but it’s important that you can see what expenses you could eliminate if you need to. If your expenses are higher than your income, you will need to start cutting out some of those wants immediately. Otherwise, you can decide which budget works best for you.
Below are three budget options for you to consider when creating your budget.
Value-Based Budgeting is my top recommendation for most people. I have a bunch of information on it in my free Money Right Guide.
Value-based budgeting is a flexible and personal approach to budgeting that allows you to choose the areas that you want to spend your money on most, based on the value that area adds to your life. For example, if you LOVE to travel or splurge on Michelin Star restaurants for special occasions, then you would build those expenses into your budget.
The idea is to create a budget that you are likely to stick with because it’s in line with your values and goals. You would start by listing the things that you value and don’t value, then you’ll clearly see the areas where you can cut back in order to increase your budget for the things that you value most.
Aren’t exactly sure what your values are? I have a great conversation with Career Coach Danielle Roberts here.
If this sounds like the budgeting style for you, read all about Value-based budgeting by clicking here.
30/30/30/10 Budget –
30% Financial goals
The 30/30/30/10 budget is a standard and fairly simple approach to budgeting. If you’re new to budgeting or need structure and parameters to help you determine how to best allocate your income, this is a good place to start. This budgeting model takes into account basic necessities while working towards paying off debt or achieving savings goals and having a little fun.
Click here to read more about the 30/30/30/10 budget rule and how it can work for you.
60/30/10 Budget –
60% Savings and Investments
10% Wants or Discretionary Spending
The 60/30/10 budgeting model is an ambitious and extreme approach intended for people with big goals like retiring early, building wealth, or purchasing a home. This will not be for everyone, but if you can live comfortably with 40% of your income or are willing to make the necessary sacrifices to make that work – this could be for you!
Does that sound interesting? Click here to learn more about the 60/30/10 budget and how it works.
After you’ve decided on the best budgeting style for you, it’s time to create your budget!
I have some great resources to get started budgeting in my free guide, here.
A great tool for someone who is new to budgeting and just getting started is a budget binder.
Now before you start thinking “It’s too much work!” – just think of it as a day planner for your finances. That way you can quickly and easily access and keep track of all of your money-related transactions.
And just like that, you’re well on your way with a new budget in place and a nice little binder to keep things organized and visually interesting. Anything to encourage you to stick to the program, right?
Check out this article on Budget Binders for step by step guidance on how to create and use a budget binder.
Step #3 – Get out of Debt
I cannot stress this one enough– PAY OFF that credit card debt! Nothing will make you feel more positive and optimistic about your financial future than being debt free. Debt can be mentally debilitating and it robs you of the opportunity to invest in your future or enjoy the things that you value most.
Start by listing all of your debt and using a credit card payoff calculator to determine how long it will take you to pay those debts off. Then create a plan to aggressively pay it off – make sure you include projected payoff dates to help you stay on track.
Check out this article on How to Pay Off Credit Card Debt to learn everything you need to know to pay off your credit card debt including a few alternative ways to do it. We also have a list of debt-free affirmations to keep you in check!
Step #4 – Start Investing and Saving
After you’ve completed the difficult tasks of reviewing your finances, establishing a budget and creating a plan to get out of debt – it’s time to get started with the fun stuff. Yes, investing and saving can be fun! Think of it as building wealth and setting your future self up for a more than comfortable retirement – I mean you want to be rich right? Ok, just checking…
Well, that’s not likely to happen without some intention and effort on your part, so the first thing you’ll need to find out is if your employer offers any retirement plans like a 401k or 403b. If they do, you need to know what percentage of your contributions will they match. This is FREE money that your employer has set aside to contribute towards your retirement. DO NOT SLEEP ON THIS!!
Now that you’ve determined your employer max, you will need to sign up (your employer can help you do this) and try to max that contribution out. The maximum contribution for 2023 is $22,500 for anyone under 50 and $30,000 for those 50 and over. If that sounds too rich for your blood, contribute as much as you can, but at the very minimum meet the employer match amount so you can get that “free” money.
Another way for you to invest your money is through an Individual Retirement Account or IRA.
There are two types of IRAs, a Traditional IRA and a Roth IRA – both accounts are great vehicles for saving for retirement because they offer significant tax advantages. With a Traditional IRA, your contributions are tax-deductible so you would pay taxes when you withdraw from the account during retirement. With a Roth IRA contributions are not tax-deductible so you won’t have to pay taxes when you withdraw during retirement.
One of the selling points of a Roth IRA is that your contributions will grow tax-free. This is a HUGE opportunity and valuable to anyone, but especially if you are starting at a young age and contributing frequently. The maximum contribution for an IRA in 2023 is $6,500 for anyone under 50 and $7,500 for those 50 and over. Invest as close to the max as possible to grow your retirement fund and live those retirement globetrotter dreams!
Aside from investing for retirement, you should look into opening a high-yield savings account. Interest rates are incredible right now and you can earn a good amount while starting and growing that emergency fund. If you’re just getting started, a good number to aim for is 3 – 6 months of living expenses. This will provide you with a much-needed safety net in case of an unexpected layoff, car issues, or large medical expenses.
Interested in investing now? Check out this article on How to Start Investing in 2023 for a detailed breakdown of investing!
Want to take your investing to the next level?
I have a class on investing that has helped thousands of students go from being overwhelmed to investing the very next day.
Step #5 – Increase Your Income
The next thing you do to have a financial glow up is increase your income! Making more money is the fastest way for you to reach your financial goals and maximize your investments. So if you have big money goals like saving for a home or retiring early, you need to find ways to earn more money.
Here are a few ways for you to increase your income:
- Ask your employer for a raise (Help on negotiating a raise here!)
- Get a promotion
- Get a better-paying job
- Start a side hustle
There are many opportunities out there for everyone, so keep your eyes open and talk to people in your network. They might know of a position that could be good for you or you can ask them to keep you in mind if anything comes up.
Are you feeling inspired to start your financial glow up? It’s going to take some work, but think of how rewarding it’ll be! After you’ve walked through the 5 steps, have your budget in place and investments/savings set up you’re going to feel accomplished and in control of your finances. Think of these 5 steps as your directions to achieving your financial goals and dreams. Now get started and glow up your finances!