Setting—and Achieving—Financial Goals

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Picking and Choosing

Second, make some calculations. Somehow—using a calculator, a software program, or a consultation with a financial planner—decide how much you can save and how much you'll need to accomplish your goals. You want to upgrade the kitchen, but are you willing to delay retirement to do that? "Make sure all the information is on the table," says Franks, of Hogan Financial Management.

A planner's job is to "tell [clients] their options and alternatives," says Mark Rylance, a financial planner at RS Crum in Newport, Calif. "If you really want this," he tells them, "this is what you have to do."

Sticking to the Plan

Once you spend some time thinking about what you want, how do you stay focused on your real priorities? Financial planners have several pieces of advice:

• Write it down. Simply putting your goals on paper is a first step. New Jersey-based planner Jeremy Portnoff recommends setting particular dates—month, day, and year—for each goal. "It makes a goal more tangible," he says. Other planners recommend setting financial policies, rules that you will follow if particular situations arise.

• Make it automatic. Rylance recommends setting up automatic payments that divert money from each paycheck toward particular goals. If saving for your goals comes off the top, you often learn to live on less. "They're tricking themselves to save," he says.

• Check on yourself. Regularly sit down and review, perhaps with a spouse or a planner, whether you're on track. Elser recommends a planning session like this four times a year.

• Get started. Sometimes people get discouraged by the immensity of their goals. So instead they do nothing. "At least start something," Rylance says. Even if it will only get you "halfway to the goal, start it."

• Reward yourself, but also think long-term. Frank Boucher, a financial planner in Reston, Va., recommends allocating funds to all your top goals, but aggressively funding the cheapest one first. Accomplishing your first goal will give you the psychological lift necessary to keep saving, he says. However, it's important not to sacrifice your long-term goals for short-term priorities. Just because a priority comes first chronologically doesn't mean it's more important to you. Don't neglect retirement planning because you want a new kitchen in a couple years. Boucher recommends focusing first on the fundamentals: Maintain an emergency fund and the right levels of insurance, stay out of credit-card debt, and save for retirement. After those goals are accomplished, feel free to dream.

"Within reason, we can attain all of our goals," Boucher says. "We just can't do them all at once."

Steverman is a reporter for BusinessWeek's Investing channel.