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The article below is courtesy of Moneywise.

Don't let money worries make you give up on your dreams

Nic Cicutti explains how you can achieve your financial goals

There comes a point for most of us when we start thinking about giving up work for good and spending time doing the things we really want to do. That feeling came to Dave Abson in mid-2008, after 28 years as a lecturer in marketing at Newcastle Business School.

1. Review your current situation

When you talk to people about how they go about planning their financial future, most will say they respond to individual issues in much the same way as one might with an illness: deal with a specific problem and when it's sorted, that's generally the end of it.

So for example, if you think your retirement income might not be all that great when you stop work, you go to a financial adviser and set up a pension. If you are paying too much in mortgage costs, you go to a broker and try to switch to a cheaper loan, end of story.

But while this approach is understandable, it does make sense to take a more holistic approach to your finances. This holistic approach is part of a much deeper process of financial planning.

For example, there is little point in charging ahead with your financial goals before you've reviewed your current financial status.

Here you need to be honest with yourself about where you are now – for instance, if you're ridden with debt, a goal that involves spending a lot of money might be unrealistic. To find out where you stand financially, draw up a budget showing your income and outgoings.

Download a free budget planner

Look at previous bank statements to see exactly what you spend your money on – this will highlight what's essential and what isn't.

Essential outgoings include your mortgage payments or rent, household bills such as gas, electricity and water, and car and home insurance and payments.

Once you know exactly what you spend each month, you can look at how to cut costs to create additional income.

For example, could you cut down on your non-essential spending or when it comes to your essential spending is there a way you could shop around for a better deal? This will help you reach your financial goal even quicker.

2. Be clear about your goals

Once you know how much money you can afford to put aside each month towards your specific goal, you need to know exactly what you would like to achieve. As Ian Howe, managing director of Baigrie Davies, says: "You need to be very specific.

"Apart from anything else, working out your goals in explicit detail is an important part of meeting them. The more definite you are, the better the potential to change."

So how do you go about creating a financial goal? Jane Wheeler, principal at Somerset-based Direction Financial Planning and the author of Sorted, a DIY financial planning book, says: "The first thing I'd do is drop the word 'financial'.

Goal setting is about what people want out of life, or dealing with changes in their lives.

"If you really think about it, most issues that matter to people - like a career change, re-training, getting married or going to live on the other side of the world – are not financial goals as such, although they have financial implications.

"For example, people don't say: 'I want £450,000'. They say: 'I want to be able to retire two years earlier'. So don't start off by thinking in terms of pounds, shillings and pence."

To assist in that process, you first need to ask yourself a series of questions that at first sight appear to have nothing to do with financial planning.

They include identifying the names of the most important people in your life, if you spend enough time with them, if there is anything – like cooking, art or writing – that you've always wanted to do.

3. Setting your goals

After this, you need to set your goal out in writing. Most people find it helps to clarify whether they really want it. It is also part of the process involved in working out how to achieve it.

Create a worksheet with column headings for short/medium and long-term goals, the cost of the goal, the target date and how much you need to put aside each month.

This will not only clarify what you want the most, it also helps you to work out when you can realistically reach your goals.

Short-term goals can be anything that is achievable within six months to two years, and could be paying for a holiday, replacing a faulty boiler or perhaps buying a new car. This could also include reducing debt or building up a savings pot.

Medium-term goals are the ones that require a slightly longer timeframe and could include paying of a larger loan or perhaps saving up for a house deposit.

Finally, long-term goals are the ones that often take 10 years or longer to achieve. This could include everything from paying off a mortgage, saving for your children's future or saving towards your retirement.

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