Set a budget and your whole outlook on life changes. You’re no longer anxious about your money; you’re on top of it. Along the way, you’ll need to make choices about which goals to invest in—and which to set on the back burner. Here are a few steps to help you get started.

1. Identify your goals

First, get specific about your financial goals. Maybe you want to pay off debt, go back to school or save for a down payment on a house. Be as concrete as possible. Ongoing goals—like building your rainy day savings account—are important, but make sure to mix in some shorter-term goals too, which can keep you motivated along the way.

2. Rank your goals

If you have more goals than your budget can support at once, try ranking them. By using a scale of one to 10, with one being the most important, you can quickly figure out which goals to tackle first and which need to be put off for later.

3. Be realistic

The next step is to scrutinize each goal. This is what Kile Lewis, co-CEO and founder of oXYGen Financial Inc., an Alpharetta, Ga.-based financial planning firm that focuses on generations X and Y, calls the “smell test.” For example, say you’re 35 years old, with $10,000 in the bank and a small 401(k), and one of your financial goals is to retire at 40 with $150,000 in the bank.

“Short of winning the lottery, that’s probably not going to pass the smell test,” Lewis says. Being realistic also means being honest with yourself about your ability to follow through. “Are you willing to do what it takes?” is a critical question.

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4. Evaluate your earnings

Once you have short- and long-term goals in place, figure out how much money you’ll need to contribute every to reach your target.

“Whether your goal is three years, five years, 15 years or 30 years, it still makes sense to sit down and quantify that,” Lewis says.

5. Review

It’s smart to have an objective third party help you determine whether your goals are up to snuff. For this, you may want to turn to the expertise of a personal banker or a personal accountant.

“We’re all myopic in our own views,” Lewis says. “You’ve got to remove the emotion from the decisions.”

6. Revise

The most important part of setting goals is attaining them. Schedule time to sit down regularly and review your progress. Be sure to adjust your goals along with any significant changes, such as switching jobs or encountering an unexpected expense.

Life comes at us fast,” Lewis says. Therefore, it’s natural that your financial ambitions will evolve over time.

Building a budget is really a way of making your money reflect the things that matter to you. With a strong plan in place, you’re on your way to turning seemingly impossible goals into realities.


Credit: suntrust.

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