Everyone knows “what” they want, but when it comes to the “how,” we’re often at a loss. Whether it’s simply providing financially for your family without worry, your first home, or even a luxury trip, your dreams don’t have to hang out of reach. You can begin working towards the financial security you’ll need to achieve them starting today. However, you’ll need to identify your goals and make a step-by-step plan first.

Define goals

Defining your goals for the future is the first step to investing. Dedicate time towards thinking about and discussing your targets with other people. In particular, if these objectives involve other people, such as your spouse, ensure that they’re included in the process. As you develop these goals on your own or with others, remember to be as specific as possible.

For instance, what year will you retire?

Which college will you send your children?

How much will you spend on traveling?

Create a timeline

Once you finish specifying your goals, you’ll need to come up with a timeline. Some of your aims can be accomplished in shorter periods of time; others will be for the long term. Next, you need to decide how much money you’ll need to accumulate and how comfortable you are with risk. Remember, all investments involve risk, so it’s important to seriously consider how much risk you’re comfortable taking, especially when moving into your later years in life.

Retirement may seem a long way off, but it’s never too early to start planning, especially if you want financial freedom in retirement. The sooner you start, the greater the effect compounding interest will have on your investments as it grows over many years.

Let’s say your goal is to retire at age 65 with $1 Million saved in retirement investments. If you started contributing $450 to a retirement account each month when you’re 25, and your investments earn 7% per year on average, you would have more than $1 Million invested in your account when you retire. If you wait until you’re 35 to start saving, you’d need to contribute at least $915 per month to reach $1 Million by retirement.

Though it’s always a good idea to start working toward your financial goals, as illustrated above, saving early and often can have a tremendously positive impact on your future.

Factor life expectancies

Another thing to keep in mind is to plan for a long life. As average life expectancies in this country have been increasing, expect to live even longer than those averages. Also, think about how much time you have until retirement, then invest accordingly. For instance, if retirement is a long way off and you can handle some risk, you might choose to put a larger percentage of your money in stock (equity) investments. Although it’s more volatile, it offers a higher potential for long-term return.

Conversely, if you’re nearing retirement, a greater portion of your nest egg might be devoted to investments focused on income and preservation of your capital. Don’t forget to consider how inflation will affect your retirement savings.

College saving facts

Whether you’re saving for a child’s education or planning to return to school yourself, paying tuition costs definitely requires forethought; the sooner, the better. With college costs typically rising faster than the rate of inflation, getting an early start and understanding how to use tax advantages and investment strategies to make the most of your savings can make an enormous difference in reducing or eliminating any post-graduation debt burden. The more time you have before you need the money, the more you’re able to take advantage of compounding to build a substantial college fund.

With a longer investment time frame and a tolerance for some risk, you might also be willing to put some of your money into investments that offer the potential for growth. The first thing to do is to estimate in detail how much it will cost to send your child to college and plan accordingly. Don’t forget to research financial aid packages or look into state-sponsored tuition plans that can help offset part of the cost.

At some point, you’ll probably want to buy a home, a car, maybe even that yacht that you’ve always wanted. Although they’re hardly impulse items, large purchases often have a shorter time frame than other financial goals; one to five years is common.

Because you don’t have much time to invest, you’ll have to budget your investment dollars wisely. Rather than choosing growth investments, you may want to put your money into less volatile, highly liquid investments that have some potential for growth but that offer you quick and easy access to your money should you need it.

The takeaway

Creating financial goals is about more than saving money. Every plan you put into action and succeed in is another opportunity. There are so many significant life events that unfortunately come with intimidatingly high price tags. Thinking ahead and acting preemptively, even in small increments, ensures that you and your loved ones get to enjoy those moments without being worried about the cost.

Navigating the process can be challenging on your own, though. Instead of taking it all on your shoulders, seek out the guidance of a financial advisor. Together, you can work out your goals, whether they’re short-term or long-term, and plan accordingly. From the beginning budget to the second revision, a financial advisor can help you craft the path that’s right for you with your financial aspirations waiting at the end of it.