1. Assess your current financial situation. This involves preparing a net worth statement and an analysis of how your income is spent. A net worth statement lists your assets and liabilities, with the difference representing your net worth. Periodically preparing a net worth statement will help you assess whether you are making progress toward your goals. Even if you do not feel a need for a budget, you should still analyze how your income is spent. The analysis can help you find ways to reduce spending and increase saving.

2. Establish written, specific financial goals. Numerous studies have shown that individuals with specific, written goals tend to achieve greater success than individuals with no goals or very vague goals. Set exciting goals to keep you motivated to reduce your current spending and save for the future. List your goals in order of importance. Since you have limited resources, some goals may need to be postponed until others are met. Set interim goals as well as an ultimate goal so you can measure your progress.

3. Develop a detailed plan, with specific strategies and timetables. You will need to consider current resources, future funds available for your goal, expected rate of return on investments, and many additional factors.

4. Implement your plan. This is the step that seems to cause the most difficulty. Preparing a financial plan is a process that can be accomplished in a short time period, but implementing the plan requires a lifetime of discipline and dedication. To help, keep these tips in mind:

• Make saving and investing part of your monthly routine so it becomes second nature to you.

• Don’t get overwhelmed by the amounts you need to save. It may take years to see substantial progress toward your goals.

• Develop an investment strategy compatible with your risk tolerance.

• Don’t try to accomplish too much at once or you may get disillusioned with your entire plan.

5. Monitor your progress. You should monitor your progress at least annually, altering your plan if progress is not satisfactory or if your goals have changed. Make sure to address these items:

• Update your net worth statement and analysis of spending.

• Evaluate your investment portfolio’s performance.

• Rebalance your investments if changes are needed to maintain your desired asset mix.

• Decide if any changes should be made to your financial goals.

6. Seek help with your plan. While you may be tempted to go through this process by yourself, there are advantages to engaging a professional’s help:

• To obtain the advice of an objective person who is knowledgeable in all areas of financial planning and can ensure that significant concerns are not overlooked.

• To keep up-to-date on new developments in the financial arena.

• To help provide the discipline needed to implement your plan. You may be more inclined to follow the plan if you know someone else is also monitoring your progress.

• To make sure all financial decisions make sense in the context of your overall financial plan.