Do you want to figure out a house budget so you can save a down payment? Plan ways to pay off your credit card and student loan debt? Or just get in the habit of paying all your bills on time?

Formalizing a list of financial goals can help. “Setting financial goals may help you prioritize,” says Heather Winston, director of individual solutions at Principal^®. “They’re a way of giving you a clear idea of why you’re saving your hard-earned money.”

Not sure where to start—or if you’ve started, how to prioritize? This doable five-step plan, complete with a financial goals worksheet (PDF), can help you achieve them.

Get started by completing our financial goals worksheet (PDF).

1. Envision your short- and long-term future.

It’s hard to set financial goals if you haven’t thought about what kind of life you want now—and in five, 10, or 20 years. Once you do that, you can think about how money helps you achieve those hopes and dreams—even if those plans change. “Financial goals don’t have to be set in stone,” Winston says. “In fact, you’ll revise them throughout your life.”

2. Categorize financial goals as short-, mid-, or long-term.

Longer-term financial goals may require more savings, and therefore more time, to plan for. In general:

• short-term financial goals are from six months to five years,
• mid-term financial goals are from five to 10 years, and
• long-term financial goals are more than 10 years in the future.

3. Set a target date for your financial goals.

Being specific helps, even if you adjust the date over time. If you have a toddler who will be heading to college in 2035, you have a target date for your college savings goal. Want to take a trip across Europe for your 10th wedding anniversary? You know what timeframe you're working toward. Add target dates to your financial goals worksheet (PDF).

4. Prioritize your financial goals: Critical, need, or want.

Label each goal on your worksheet: critical, need, or want so you know what to fund first. Let’s say you have a short-term goal to build up your emergency fund, and it’s “critical.” But another short-term financial goal is to trade your car, which is running just fine—that's a “want.” If funds become tight one month, you know where to put your money.

5. Layer in the current state of your savings.

Now that you know what you want and need to save, and the dates for all your goals, you can add in what you’ve already saved. Some goals may not have current savings. That’s OK: Now’s the time to just start.

For example, if you plan to buy a home in two years and you need $15,000 more for a down payment, divide that by 24 months. Then you know to save $625 more per month toward that goal. Do you have money in a Roth IRA, 401(k) or 403(b), or IRA? If so, log those numbers on your worksheet as you plan your retirement-related goals.