Some have wondered how financial goals relate to personal goals. Your financial goals are simply personal goals that have a financial cost attached. Not every personal goal is a financial goal, but many personal goals require some money to accomplish. Certain personal goals cannot be accomplished without meeting specific financial targets, such as saving for the down payment on a house or saving for a child’s education or mission. If you do not calculate and plan for the costs of many of your personal goals, it is likely that you will not be able to accomplish them.

The processes for setting personal goals and setting financial goals are the same:

1. Identify your goals and write them down.
2. Prioritize your goals, and list them in order from most important to least important.
3. Calculate the financial costs of each goal that requires financing.
4. Set a completion date for each goal and record the total amount needed to complete the goal.
5. Determine how much you must save each month (and which accounts you will use to save that money) to meet your goals.
6. Begin saving now.
7. Periodically evaluate your progress toward achieving your goals.

There are several important questions you should ask yourself about each of your financial goals to see if you are really committed to attain them.

First, how important is the goal to you? Another way to phrase this question is to ask how much you are willing to sacrifice to pursue the goal. Most goals require sacrifice to achieve. If you are not willing to make the sacrifices necessary to achieve a particular goal, you probably will not be able to achieve it.

Some of the “goals” on your list may really just be wishes—things that you dream of having or achieving, but things that you are not really committed to working towards. So ask yourself, is this truly a goal, or is it just a wish? Wishes do not count—eliminate them from your list.

Second, how much money do you need to accomplish the goal? Once you have calculated the financial cost of each goal, determine whether the amount you need is before-tax or after-tax money, and whether it is before-inflation or after-inflation money. This is important to determine because the differences between these amounts may be substantial. Do not let inflation or taxes keep you from achieving your goals.

Finally, when do you need the money? Is the goal feasible with your current financial plan? Good financial plans require you to sacrifice—to stretch—but they are also reasonable for your individual financial situation.