I reached the turning point in my own finances when I set a specific, realistic goal and committed myself to reaching it. I wanted to buy an engagement ring for my wife without going into debt for it. I didn't have enough cash, so I needed to save money until I did. Once I had a reason to stop spending and put money into a savings account, it was much easier to get myself to actually do it. It wasn't not much of a contest when I considered that I could buy this cool new toy, but then it would be another month before I could buy that ring.

A Taste of Success

And guess what? Successful goal-accomplishing feels great. Once I got a taste, I was hooked. And good thing, too! Because the next goal on the list was a honeymoon. And an emergency fund in case I was ever suddenly unemployed.

From there, it was time to look at medium and long-term financial goals. Like saving a down payment for a house, planning for kids and college, and retirement (those expenses just keep coming!). I don't think I could have stayed as committed to these goals without that success from the smaller ones, because these don't pay off as quickly. That is key for me -- I am bad at sticking with long-term commitments (when was the last time I went to the gym?), so the early successes help keep me motivated for the long haul. Now we have a specific financial plan for reaching these goals that we're actually sticking to.

Getting Specific

So do you have any goals? If you don't have any more specific than "get rich," or even "financial security", then it's time to really give yourself something to aim at. If you're like me, start yourself with something that you can achieve within a few months to a year. Like paying off that one high-interest credit card, or saving a month's salary in an emergency fund. Get the right goals in place, and the good spending and saving habits suddenly aren't so tough.

My most immediate goal is to buy a house within the next year or two. Not only does this keep my wife and me motivated to keep saving money, it also affects the way that we manage our money. For example, a large percentage of our net worth is in very low-risk investments such as CDs, so that we'll be able to pay a large down payment. Without knowing our goals, we would be blindly following some saving and investment plan that probably was not correct for our needs.

What are your goals?