Dreams that don’t include ways to reach them often turn out to be daydreams. Reaching your financial goals is best accomplished with an objective plan that includes realistic goals and exact steps for reaching them.

Creating financial goals that include amounts and dates for reaching them, then devising specific steps you can take to achieve them, will help make sure you dreams become realities.

Include both outcome and performance goals to improve your finances.

Set Objective Goals

The first step to reaching financial freedom and your ultimate destination is to set objective, realistic goals. Saving for retirement isn’t a realistic goal. Saving $X by a specific year helps you determine how much you need to save each month to reach your goal.

Free online retirement calculators let you enter your age, year you wish to retire, current savings and desired retirement annual income, adjusted for inflation, to determine what you’ll need to save. Owning a home is another example of a unhelpful goal.

Work with a mortgage broker to determine how much down payment you will need to buy a home you can afford based on your current income.

Set Specific Dates

Once you have specific goals, set dates to reach them. This will force you to budget monthly savings or make spending reductions to be able to meet your goals. When you do this, you might learn your goals are unrealistic and have to readjust them.

Create a Personal Budget

When you know your monthly obligations for meeting your goals, you can create a realistic budget. This will let you see if you current expenses, subtracted from your income, allow you to save enough money to achieve your goals. If you can’t, you’ll at least be able to see if you can cut your expenses or raise your income to meet your goals.

Manage your Debt

One thing that can throw your financial goals off track is debt. If you use your credit cards and don’t keep track of interest payments, you might not properly budget this money, which can cost thousands each year.

If your debt becomes unmanageable, you might begin missing payments, damaging your credit and further hurting you ability to save money or get loans you’ll need.

Include interest payments as an expense in your household budget, even though the payments go on your card balance. Paying $3,000 a year in credit card interest over a 40-year working career adds up to $120,000 you’ve lost.

Invest your Money Strategically

Wise bettors know not to gamble money they don’t have. If you’ve got an investment portfolio, manage your risk by assessing how much money you can afford to lose chasing that sexy stock. Create an portfolio of financial instruments and securities that provide the right mix of conservative and risky stocks that won’t knock your goals off track if the higher-risk investments don’t pan out.

Track your Performance

Don’t be rigid with your financial plan once you’ve created it. Re-examine your performance and re-assess your goals each year to determine if you can accelerate things or need to scale your goals back, based on how you’re doing. Your financial picture will change as you have children, lose or change a job or the economy rises or falls. Don’t live today with a financial plan you made five years ago.