In this step, you need to define the costs of your goals, and then determine the amount of monthly savings necessary to achieve your goals.

Define the costs of your goals
It is essential that you accurately determine the costs of your goals. For some goals, such as saving for a new car, it may be fairly simple. Visit a dealership, check out the newspaper want ads, or log on to the Internet and check out dealers. Once you know what type of car, and an approximate cost, you can increase the cost by 3-5% per year, and then proceed to the next step and determine how much you need to save.

Other goals, such as funding retirement, should require you to determine a realistic cost. While it might be easy to figure that you will need $1,000,000 to retire, how do you know that this will be sufficient. After all, if you have 30-40 years until retirement, you may learn that a million dollars will be totally inadequate for the type of retirement that you want.

For those goals that are covered by other sections of this website, we recommend that you develop individual plans and then use those results to complete your total financial plan.

• Eliminate debt
• Save for retirement
• Fund a college education

For some goals, you will need to use other means to estimate the appropriate cost. You can talk to family and friends, locate a professional, or research costs on the Internet.

Determine the necessary monthly savings
The next step is to determine the appropriate amount you will need to save each month to achieve each individual goal. The easiest way to do this is to use a savings calculator. Newlywedfinances.com has a debt/savings calculator that we like. For savings, use the two calculators on the bottom of the page. For the rate of return in your calculations, we recommend that you use 2% - 3% for short-term goals (less than 5 years), 6% - 8% for mid-term goals (up to 10 years), and 10% - 12% for longer-term goals.

Figure the amount you will have to save each month for each goal and note the amount on your worksheet. Once this is done, you are ready to proceed to the next step.

Step Six - Perform a financial assessment