Before you do anything else, you need to think about your goals. If you don't know where you're heading, how can you get there?

Goals are as individual as you are. Maybe your dream is to sail around the world. Perhaps you'd like to retire early. You may have children you'd like to see attending a good college. Possibly you have debts you need to reduce or eliminate.

Sit down and do some thinking about where you'd like to be next year, in five years, in ten years. Many people don't want to do this, because life is so unpredictable. But you have to plan to accomplish your goals. And goal setting is the first step in any financial planning process.

Sample goals:

• accumulate emergency funds
• send the children through college
• get out of debt
• retire
• buy a house
• take a dream vacation
• improve a house you already own
• achieve financial independence

Most people come up with ideas like these and stop there. We want you to be very specific about your goals. A goal is not really a goal until you have a time frame (when you want to accomplish the goal) and a cost (how much the goal will cost you) attached to your statement.

We also want you to separate your goals into:

• short-term: less than three years;
• intermediate-term: between three and five years; and,
• long-term: more than five years.

Take a pencil and paper and write down your goals. Give them a lot of thought. Talk to your family about them. Ask yourself which goals are wants and which are needs. Do you want some new clothes because you are tired of looking at the old ones, or do you need them because they're in tatters?

Don't necessarily eliminate the things you want but don't need; just remember to prioritize. And since few of us can have everything that we want, knowing your priorities will help you determine what has to change.