Building your financial future is somewhat like building a skyscraper: both require planning. That structure isn't likely to ever touch the sky without a blueprint and a summary of steps to be completed. Similarly, to achieve lasting financial security — a state of being in which you're able to achieve goals and feel at ease about money — you need a well-thought-out personal strategy. This holds true for everyone, regardless of net worth or household income level.

Without a financial plan, you might have only a vague idea that things will work out for you someday. You may have a lot of debt and no real plans to deal with a financial emergency like a job loss or costly illness or injury. Any dreams of things like putting your child through college or retiring someday are likely to seem unfocused and beyond reach.

A financial plan empowers and motivates you to make good things happen. It gives you more control over your money and your state of mind, and it improves the trajectory of your financial wellness.

Start with goal setting

Begin developing your plan by defining your financial goals. In fact, right now is a great time to set goals for the year ahead and beyond. Ask yourself:

• What matters to you?
• What do you want out of life?
• What would you like to accomplish in the year ahead, a few years from now and farther into the future?
• Which of these things will be within your financial reach if you save and invest for them?

The next several weeks will also be a good time to revisit any goals you've set in the past to make sure they remain relevant and important to you.

Financial goal examples

We'll give you a few examples of common financial goals. You may have different goals than these.

Paying off debt

If you're carrying a balance on a credit card from month to month, the interest you're paying is increasing the cost of every purchase made with the card. Credit card interest rates are among the highest.

Building an emergency fund

An emergency savings fund might carry you through a financial hardship like a job loss, unexpected medical bills, or unforeseen car or home repairs. Generally, you should have enough cash set aside to cover at least three to six months of basic living expenses. But every little bit helps, even if it's only a few hundred dollars.

Buying a home

Home ownership offers tax advantages, an investment that historically has increased in value faster than inflation and the freedom to make capital improvements to your living space if you wish.

Putting your child through college

If you plan to send your child to college, it's important to start saving for that typically expensive goal as early in the child's life as possible. Use the resources of your EY Navigate™ website or mobile app or call the EY Navigate Planner Line™ to explore various ways to get tax advantages on your college savings.

Retirement

Even if retirement is years away, it's a goal you should start saving for as early as you can. You'll give your savings more time to benefit from the compounding of investment earnings. Compounding occurs when your earnings attract more earnings, creating a snowball effect that causes your savings to grow at an increasing rate.

Your workplace 401(k), 403(b) or 457 savings plan offers one of the best ways to save for retirement. The plan offers tax advantages on your savings and, depending on how your plan works, your employer might match a portion of your contributions.

Goal-setting tips

Set "SMART" goals

Be sure that each financial goal you set for yourself is "SMART":

• Specific
• Measurable
• Achievable
• Realistic
• Time-bound (linked to a time frame)

Write goals down and categorize them

People who write down their goals are 50% more likely to achieve them, according to Dr. Gail Matthews, a clinical psychologist from Dominican University of California. Also, multiple goals are easier to coordinate when they're in written form.

Categorize each goal as either short-term (one to three years away), intermediate-term (three to seven years away) or long-term (seven or more years away). It might help to focus on pursuing smaller, short-term goals first because accomplishing them could give you the shot of confidence you need to go after costlier, longer-term goals. Retirement is the exception, though — the sooner you start saving and investing for retirement, the sooner you can start taking advantage of compound earnings on your nest egg.

Keep your list of goals handy so that you can give it a fresh look at least once a year.

Outline action steps

Once you've set your goals and put them in writing, you can decide on action steps to achieve them. Among the first steps for any goal that will require savings is to create an investment strategy based on your desired investment return, your tolerance for risk and how much time you've given yourself to achieve the goal.

Get help from EY

Your EY financial planner can assist you one on one with setting your goals and creating your financial plan. Also, your EY Navigate website and mobile app have many tools to help you set goals and stay on track toward achieving them.

Among the tools you'll find on the site and app is the Savings Goal calculator. For any given goal, this user-friendly calculator will ask you:

• How much will your goal cost?
• When do you want to achieve the goal?
• How much money do you already have available to put toward the goal?
• How much money will you be able to save for the goal each month?
• What rate of return can you expect to get on your savings?

Once you fill in the requested information, the calculator will show whether you're on track toward achieving your goal on time and, if not, what you need to do to get on track.

This material is provided solely for educational purposes; it does not take into account any specific individual facts and circumstances. It is not intended, and should not be relied upon, as tax, accounting, or legal advice.