GETTING STARTED Look at Cash Flow Calculate Your Net Worth Set Your Goals Build Your Budget MORE... BUDGETING TOOLS Should I pay off debt or invest in savings? How much am I spending? What will it take to pay off my balance? Cost-of-living comparison calculator Should I consolidate my debts? Can one of you afford to quit?

BUDGETING
Set Your Goals

The most important step toward financial security is to translate it into your own terms. What, exactly, are your personal financial goals? If you have trouble sorting them out, try classifying them as either wants or needs. Go a step further and add long-term or short-term to the description. Now you have some useful labels you can apply to your priorities.

Say you're going to need a new car soon. Gathering the money for a down payment without borrowing or dipping into savings would be a short-term need. Let's call it, and other short-term needs such as your daughter's braces or a new winter coat, priority number one.

Longer-term needs, such as contributions to a retirement fund, can get priority two. That vacation in Bermuda next spring is a short-term want -- priority three. The 42-foot sailboat you'd like to own before too many years go by is a long-term want, so it gets a four.

You could shift priorities around, of course, and use lots more numbers. Actual goals and their priorities will vary with your circumstances. The important thing is to give serious thought to your goals and try to anticipate the expenses coming up, whether they're close at hand or several years away.

Choose goals you can get excited about, because that will make you more determined to reach them. "Financial security" sounds good, for instance, but it's hard to quantify. It needs some skin and bones. Define what it means to you. How about this? "I want to own a million dollars' worth of stocks by the time I'm 50." Or this: "We want to retire to Arizona in ten years with enough money to buy a house near Phoenix and enough income to travel in Europe for a month each year." Now you've got goals you can put a future price on, and that price can be translated into a savings and investment plan that you can start today. Put your goals in writing; that makes for a great motivational tool.

The trouble is, exciting goals and good intentions need cash to back them up. That's where budgeting comes in. It's your best bet for distributing your limited resources among competing goals.